DRAFT — Power Division Blames K-Electric for Rs34 Billion Jump in Circular Debt
- Suggested slug: k-electric-rs34-billion-circular-debt-blame
- Category: Business News
- Focus keyphrase: K-Electric circular debt
- SEO title: K-Electric Blamed for Rs34bn Rise in Circular Debt
- Meta description: Power Division told the National Assembly that unpaid K-Electric dues added Rs34bn to the K-Electric circular debt, now Rs1.675 trillion by June 2026.
- Tags: K-Electric, circular debt, power division, electricity bills, Karachi, IPPs, energy crisis, Pakistan economy
- Original element: Sets the Rs34 billion rise against Feature Pakistan’s own recent power-sector reporting (Discos’ September FCA hike and electricity-price inflation) and notes what persistent circular debt means for Karachi consumers’ bills.
- Source: https://propakistani.pk/2026/10/19/k-electric-responsible-for-pakistans-worsening-circular-debt/ (ProPakistani, published 19 Oct 2026)
- Story date: 19 October 2026
—
The Power Division has pointed to unpaid K-Electric electricity bills as the reason behind a Rs34 billion rise in Pakistan’s power-sector circular debt. Figures presented in the National Assembly show the debt stood at Rs1.641 trillion at the end of June 2025 and reached Rs1.675 trillion by June 2026, with the division attributing the increase to K-Electric dues. The K-Electric circular debt dispute has therefore become a central issue in the sector’s financing troubles.
The numbers were placed before the lower house as part of the ministry’s account of the power sector’s liabilities. Circular debt has remained a long-running problem for the national grid, and the latest figures confirm that the pile of unpaid bills and obligations continued to grow over the fiscal year ending June 2026. The division’s position is that K-Electric’s outstanding payments explain the bulk of the year-on-year increase.
Rs34 billion tied to unpaid K-Electric dues
According to the Power Division’s briefing, the Rs34 billion jump in circular debt between June 2025 and June 2026 came from K-Electric’s unpaid dues. The utility supplies power to Karachi and has owed money to the national system, and the ministry has now formally connected that arrears position to the rise in the headline debt figure. The statement marks a sharper public stance from the division against the utility over its payment record.
Recovery case remains in court
A case seeking recovery of the outstanding amount is currently pending in court. The Power Division has not disclosed a timeline for the legal proceedings, and the recovery effort remains tied to the outcome of the case. Until the dues are recovered, the liability stays on the books and continues to add to the circular debt load that the sector carries from one fiscal year to the next.
Hybrid take-and-pay model for IPPs
To control the debt and reduce outstanding liabilities, the government has introduced a hybrid take-and-pay model for independent power producers. The model changes the terms on which the state pays power producers, and it is intended to cut the liabilities that accumulate when capacity payments and unpaid bills pile up. Officials expect the revised IPP arrangements to slow the growth of circular debt over time.
K-Electric circular debt adds to pressure on consumers
Feature Pakistan has been tracking the strain on household budgets from rising power costs. The latest Rs34 billion rise lands alongside the Rs2.56 fuel cost adjustment for September imposed by distribution companies, electricity-price inflation that has squeezed families across the country, and the shifts in imported coal power generation in September 2026. Persistent circular debt is not an abstract accounting problem. It eventually feeds into tariffs, because the system recovers its financing costs from consumers through their bills.
For Karachi, the link is direct. If K-Electric’s unpaid dues keep the national debt rising, the city risks further tariff adjustments and the financial instability that has plagued the sector for years. The government is meanwhile pressing ahead with broader reforms, including Gepco’s Rs25 billion capital limit ahead of privatisation, as it tries to stabilise distribution companies and trim their losses. But as the ProPakistani report on the assembly briefing notes, the debt curve moved upward again in the latest fiscal year, despite the reform push.
Frequently asked questions
What is Pakistan’s circular debt figure now?
Circular debt stood at Rs1.675 trillion by June 2026, up from Rs1.641 trillion at the end of June 2025, according to figures the Power Division presented in the National Assembly.
Why is K-Electric being blamed for the rise?
The Power Division attributes the Rs34 billion increase in circular debt to unpaid K-Electric electricity bills. A case to recover the outstanding amount is pending in court.
What is the hybrid take-and-pay model?
It is a revised payment arrangement the government has introduced for independent power producers. The model is intended to help control circular debt and reduce outstanding liabilities owed to producers.
