The Ministry of Energy (Power Division) has said that the increase in circular debt from July to November 2025 has primarily been caused by seasonal factors that influence monthly debt movements and are reversed by the end of the fiscal year.

"It is important to note that the circular debt flow declined in December 2025, resulting in a net debt flow of less than Rs80 billion for July-December 2025," said a Power Division spokesperson in a statement.

Earlier, the official mentioned, the circular debt declined significantly during fiscal year 2024-25 to Rs1,614 billion. "This reduction was achieved through improvements in DISCOs' operational efficiencies, strengthening of macroeconomic variables and the waiver of late payment interest following successful negotiations with the independent power producers."