Ministry asked to resolve KE guarantee issue

The Economic Coordination Committee (ECC) discussed a dispute involving K-Electric (KE), which has been served a gas supply disconnection notice due to an alleged breach of guarantees.

The Minister for Petroleum urged the Power Division to address the issue promptly, while the ECC directed the ministries of petroleum and power to work together for a swift resolution.

The Power Division explained that KE's unpaid electricity dues had contributed around Rs200 billion to the circular debt, while surplus funds under the tariff differential subsidy remained tied up because KE's tariff case is still pending before the courts.

The ECC instructed the Power Division to actively pursue the legal case in consultation with the Ministry of Law & Justice and the Attorney General of Pakistan. Officials informed the committee that Pakistan's power sector continues to struggle with mounting circular debt, which stood at Rs1.924 trillion as of May 31, 2026, including Rs873 billion owed to banks.

The government had committed to the IMF to reduce circular debt to Rs1.6 trillion by the end of June 2026. Delayed payments to independent power producers (IPPs) and other entities were described as a serious threat to electricity supply, financial stability, and economic growth, while also increasing the risk of sovereign guarantee calls and late payment surcharges.

To ease liquidity pressures, the government had allocated Rs893 billion for power-sector subsidies during the 2025-26 financial year, including Rs257 billion earmarked as equity support for government-owned power plants and IPPs.

Of this amount, Rs105 billion had already been released, while the remaining Rs152 billion was requested for disbursement to the Central Power Purchasing Agency-Guarantee (CPPA-G).

After reviewing a summary on releasing these funds and reallocating available budgetary resources, the ECC partially approved the proposal by authorizing Rs54.4 billion after adjusting Rs97.5 billion through re-appropriation within the Power Division.