Electricity consumers may soon face another significant financial hit as the government finalizes a plan to raise electricity prices in an effort to eliminate ballooning circular debt.

According to an exclusive document obtained by Samaa TV, the Circular Debt Management Plan 2025–26 outlines sweeping measures aimed at putting the power sector back on track.

The document warns that Pakistan’s circular debt, which stood at Rs1,614 billion in the last fiscal year, is now expected to climb to Rs2,348 billion — an alarming increase of Rs734 billion. Officials say low recoveries and rising production costs remain the core drivers behind this mounting debt.

Zero flow of circular debt

Sources confirm that the government has assured the IMF of upcoming electricity tariff hikes, presenting them as essential steps to stop the continuous buildup of circular debt. The plan highlights a national mission to bring the power sector’s circular debt flow down to zero, restoring financial stability and reducing reliance on subsidies.

Key cost-cutting measures

To curb production costs, the document states that expensive power plants will be shut down, prioritizing cheaper generation sources. It also emphasizes strict directives for power distribution companies to reduce technical and commercial losses through improved efficiency.

The plan further mandates timely recovery of arrears from K-Electric and Gencos, aiming to plug long-standing revenue leakages.

With the government moving forward on its commitments, consumers have been warned to “be prepared to bear the new burden.” Tariff increases appear inevitable as Islamabad attempts to meet IMF expectations and stabilize the collapsing power sector.