LAHORE – The Pakistan Industrial and Traders Association Front (PIAF) Chairman Faheemur Rehman Saigol has welcomed the government’s landmark Rs1.225 trillion financing arrangement with a consortium of 18 banks to retire circular debt and settle long-pending dues of independent power producers (IPPs), calling it a decisive move to stabilise the energy sector and restore macroeconomic confidence. At the same time, the association cautioned that the gains from this initiative will only be sustainable if accompanied by deep-rooted reforms to cut losses, improve recoveries and modernise infrastructure.
In a joint declaration, PIAF Chairman Faheem Saigol, Senior Vice Chairman Nasrullah Mughal and Vice Chairman Tahir Manzoor Chaudhary said the decision to restructure circular debt on more favourable terms and service it through a dedicated surcharge shows the government’s resolve to address one of the economy’s most persistent challenges. “This is a historic step and deserves appreciation,” the leaders said, noting that no other economy of Pakistan’s size carries such a recurring burden, which undermines investment, growth and fiscal stability.
They pointed out that the new loan facility—finalised by the Ministry of Finance with 18 banks at Kibor minus nine percent—buys time for reforms already under way. They acknowledged Power Minister Awais Leghari’s announcement that circular debt had already been reduced from Rs2.4 trillion to Rs1.64 trillion through negotiations with IPPs, loss reduction and lower interest costs. “We appreciate the government’s efforts to bring transparency and discipline to the sector and to ensure that the Rs3.23 per unit surcharge will end once the debt is cleared in six years instead of eight to ten years originally projected,” they added.
At the same time, the three office-bearers warned that unless fundamental issues of governance, theft and billing inefficiencies are addressed, circular debt could accumulate again after the facility ends. “Borrowing to clear old dues is only one side of the equation. The other is to make sure new arrears do not emerge,” they said. The association urged the authorities to accelerate loss-reduction plans, strengthen distribution company boards and introduce technology to monitor consumption and recoveries in real time. PIAF also called for a clear roadmap to gradually reduce the burden of surcharges on electricity consumers and industries. “Energy cost is a key determinant of competitiveness. If businesses continue to pay higher tariffs for an extended period, it erodes their ability to invest, expand and create jobs,” the leaders said. They suggested that savings from loss reductions and efficiency gains be transparently passed on to consumers as soon as possible.
The group welcomed the government’s engagement with the International Monetary Fund and praised the inclusion of the circular debt plan in programme targets as a sign of policy credibility. It said the plan could help restore investor confidence, attract fresh capital into the power sector and free up fiscal space for agriculture, SMEs, housing, education and health—provided reforms are sustained.
