Pakistan’s outstanding payments to China-Pakistan Economic Corridor (CPEC) power projects have surged to Rs. 423 billion by the end of the 2025-26 fiscal year, highlighting the growing financial challenges facing the country’s power sector.
According to reports, a major obstacle is the dispute over Rs. 170 billion in accumulated late payment surcharges. Chinese lenders and Independent Power Producers (IPPs) have reportedly refused Pakistan’s request to waive these charges, making it more difficult for the government to reduce its financial burden. In addition, Pakistan still owes approximately Rs. 260 billion in unpaid energy purchase payments to CPEC-linked power projects.
To ease pressure on the energy sector, the government is seeking up to $10 billion in low-cost international financing. The proposed funding would replace expensive loans taken for CPEC power projects, helping lower debt servicing costs and potentially reduce electricity tariffs for consumers.
Pakistan’s power sector continues to face mounting financial pressure. Consumers are currently paying for nearly $30.6 billion in power producer debt over the next 13 years, while an additional $5.7 billion circular debt surcharge is also being recovered through electricity bills. Debt repayments now account for nearly one-third of the country’s average electricity tariff, placing a heavy burden on households and businesses.
Among the largest outstanding payments are Rs. 85 billion owed to the Sahiwal Coal Power Plant, Rs. 76 billion to Port Qasim Power Plant, Rs. 64 billion to Hub Power Plant, Rs. 54 billion to Thar Coal Block-I Power Generation Company, and Rs. 43 billion to Engro Powergen Thar.
The ongoing negotiations reflect Pakistan’s efforts to stabilize its energy sector, manage circular debt, and reduce electricity costs. However, without a breakthrough in talks with Chinese lenders and power producers, resolving the country’s growing energy debt challenge is expected to remain a major economic priority.
