The Ministry of Energy’s Power Division on Monday strongly denied media reports that suggested a sharp rise in circular debt. Officials said the figures quoted for the period from July to November 2025 were factually incorrect and based on partial data.
Responding to a news report, a spokesperson for the Power Division said the story failed to use updated information and did not seek the official version of the department. He added that the report lacked proper context and created unnecessary confusion.
The spokesperson explained that circular debt stock on June 30, 2025 cannot be compared with the stock at the end of November 2025, as the latter covers only three months. He said the report wrongly linked changes in circular debt with the Banks Agreement, which was designed to replace expensive PHPL debt with cheaper loans under a five to six year repayment plan.
He said a fair comparison should have been made between July to November 2025 and the same period of July to November 2024. The increase seen in the earlier period was mainly due to seasonal factors that affect monthly circular debt flows and usually reverse by the end of the fiscal year.
The spokesperson said it is important to note that circular debt flow declined in December 2025. As a result, the net circular debt flow from July to December 2025 remained below Rs80,000,000,000.
He also pointed out that the same media report acknowledged a major reduction in circular debt during FY 2024-25, which stood at Rs1,614,000,000,000 by June 2025. This reduction was achieved through better performance of power distribution companies, improved economic conditions and waiver of late payment interest after successful talks with independent power producers.
According to the Power Division, circular debt is expected to remain fully contained by the end of the current fiscal year, with no net increase in overall stock. This follows past trends where seasonal fluctuations settle later in the year.
The spokesperson stressed that these seasonal changes have no effect on electricity tariffs and do not impact consumer-end prices.
He further said inefficiencies in distribution companies during FY 2024-25 were reduced by Rs193,000,000,000 compared to FY 2023-24. During July to December 2025, inefficiencies dropped further by Rs49,000,000,000 compared to the same period last year.
These improvements, he said, show the government’s continued focus on efficiency and financial discipline in the power sector.
The spokesperson also highlighted the Rs1,225,000,000,000 Circular Debt Settlement Plan, which will be implemented over six years. Under this plan, existing debt will be refinanced on better terms. He added that the first tranche has already been received and the full stock is expected to be eliminated within six years, along with the end of the Debt Service Surcharge.
The government is pushing back against alarming debt figures. Officials say poor comparisons created confusion. Seasonal changes often distort short-term data. Long-term plans suggest tighter control over circular debt ahead.
