Minister for Power Sardar Awais Khan Leghari announced that negotiations with banks for loans worth Rs1.34 trillion are in the final stages, aimed at reducing the power sector’s circular debt, which currently stands at Rs2.4 trillion.
According to media reports, the power minister said that once the banks submit their term sheets, agreements will be finalized, helping to reduce the circular debt by Rs300-335 billion.
Leghari explained that the loans will be repaid through the debt servicing surcharge (DSS) of Rs3.23 per unit, with both current and future governments continuing to make repayments through this mechanism.
He also highlighted the ongoing discussions with China regarding debt reprofiling and converting to local coal, noting that these talks were progressing smoothly. He indicated that the tariff rebasing in June 2025 could lead to further reductions as ongoing reforms are successfully implemented.
“Our reforms are focused on creating a sustainable, long-term reduction mechanism based on efficiency,” he stated. He further explained that if the tariff reductions had been solely based on renegotiated IPP contracts, the International Monetary Fund (IMF) would not have supported such significant price cuts.
According to the minister, the IMF emphasized the importance of continuous reform processes, which have helped build confidence in the power sector’s path toward sustainability.
Additionally, Leghari revealed that the centralized trading of bulk power markets (CTBCM) would be operational by the end of the current year, with an initial plan to begin bilateral trade of 800-1000 MW of electricity. He expressed optimism that continued reforms would place significant downward pressure on electricity prices.