Karachi: Syed Mazhar Ali Nasir, a leading figure in the United Business Group and former Senior Vice President of the Federation of Pakistan Chambers of Commerce and Industry, has identified circular debt as a significant and escalating challenge for Pakistan’s economy. Addressing the issue, he noted the debt’s increase from PKR 400 billion in 2012 to PKR 2.5 trillion in 2024, attributing the rise to substantial payments made to Independent Power Producers (IPPs).

According to United Business Group, Mazhar Ali Nasir detailed how circular debt has led to severe repercussions, including a cash flow crisis in the power sector, underinvestment in infrastructure, and higher consumer tariffs. He pointed out that the debt, primarily driven by capacity charges to IPPs totaling over PKR 1.3 trillion, has strained financial stability and dampened investor confidence.

Nasir called on the government to undertake urgent structural reforms within the power sector, suggesting renegotiations of IPP contracts, enhancements in electricity production efficiency, and adjustments in consumer tariffs to mitigate the debt’s impact. He emphasized the necessity of these measures to secure a sustainable economic future for Pakistan and to shield its citizens from further financial hardships.