Pakistan finalises record Rs659.6bn settlement of power sector debt, says minister

Pakistan has completed a landmark Rs659.6 billion (approximately $2.3 billion) settlement of liabilities owed by Power Holding Limited (PHL), announced by Federal Minister for Power Sardar Awais Ahmed Khan Leghari. This transaction, the largest in Pakistan’s debt capital markets, involved redeeming Pakistan Electric Supply (PES) I & II bonds and clearing funds through syndicated financing facilities. The settlement is a core component of the Rs1,225 billion Circular Debt Reduction Plan and demonstrates the maturity of Pakistan’s capital market.

Experts believe this move will significantly improve the energy sector’s financial stability by addressing high circular debt, liquidity constraints, and inefficiencies. By restructuring financing and redeeming PHL obligations, the government intends to enhance the financial health of power distribution companies and attract investment. The government remains dedicated to broader energy sector reforms and long-term fiscal stabilization.

Circular debt, a long-standing economic vulnerability for Pakistan, arises from unpaid bills across the power supply chain, exacerbated by issues like inefficient distribution, power theft, and delayed tariff adjustments. This debt cleanup aligns with structural reforms required under Pakistan’s International Monetary Fund (IMF) program, signaling a step towards sustained energy sector reform and economic growth.

(Source：Geo Tv)