Govt clears Rs659.6b power debt

The government has completed its largest-ever capital markets debt transaction, settling Rs659.6 billion ($2.3 billion) in power sector liabilities as part of its ambitious plan to slash chronic circular debt, Power Minister Sardar Awais Ahmed Khan Leghari said on Wednesday.

The settlement includes Rs399.6 billion in redemption of Power Holding Limited's Pakistan Energy Sukuk (PES) I and II through an off-market transaction in the negotiated deal market, alongside Rs259.7 billion cleared under various syndicated financing facilities.

Through a post on X, the minister described it as a landmark transaction, a core component of the Rs1.225 trillion Circular Debt Reduction Plan, reflecting strong institutional confidence in Pakistan's economic reforms, government initiatives and the depth of the country's capital and Islamic finance ecosystem. The government remains committed to structural energy sector reforms along with long-term fiscal stabilisation and looks forward to engagement with all stakeholders to accelerate reform-driven growth, said the minister.

Circular debt, the web of unpaid bills across power producers, fuel suppliers and distribution companies, has been one of the country's most persistent economic vulnerabilities. It has ballooned over the years.