Energy & Consumer Affairs | July 2026 | 4 min read
⚡ Quick Takeaways
- LESCO says its circular debt fell by Rs. 136 billion over the past two years.
- The company reported a decline from Rs. 339 billion in FY2023-24 to Rs. 203 billion in FY2025-26.
- Management linked the improvement to lower line losses, near-100 percent bill recovery and timely power purchase payments.
- LESCO said older circular debt figures for FY2021-22 and FY2022-23 were revised after audited financial statements.
- Its new three-year plan aims to bring circular debt below Rs. 150 billion by FY2028-29.
LESCO is presenting its latest circular debt numbers as a major improvement story, but the real test will be whether recovery gains and loss reduction can continue over the next three years.
| Rs. 136bn claimed circular debt reduction |
Rs. 203bn reported FY2025-26 circular debt |
Below Rs. 150bn three-year reduction target |
LESCO Reports Major Circular Debt Reduction
The Lahore Electric Supply Company has said its circular debt has fallen by Rs. 136 billion over the past two years, rejecting the impression created by recent media reports that its financial position had worsened. LESCO Chief Executive Officer Engineer Muhammad Ramzan Butt told ProPakistani that circular debt remained a national issue, but the company’s own stock had declined sharply.
According to the company, LESCO’s circular debt fell from Rs. 339 billion in FY2023-24 to Rs. 203 billion in FY2025-26. The management described the reduction as historic and linked it to operational and governance reforms carried out under the guidance of the Ministry of Energy’s Power Division, the company’s Board of Directors and its current leadership.
For consumers, the claim matters because circular debt is one of the biggest financial pressures in Pakistan’s power sector. When distribution companies fail to recover bills, reduce losses or pay power purchase obligations on time, unpaid amounts can move through the system and add pressure on tariffs, subsidies and public finances.
| Consumer Impact: Lower circular debt at a power company can reduce pressure on the wider sector, but it does not automatically mean cheaper electricity bills. |
Near-100 Percent Recovery Drives the Claim
LESCO attributed the improvement to three main factors: lower line losses, near-100 percent bill recovery and the timely payment of electricity purchase obligations during FY2024-25. These are important indicators because they show whether a distribution company is collecting what it bills and whether less electricity is being lost before it reaches paying consumers.
The company also said some circular debt numbers for FY2021-22 and FY2022-23 had been provisional. Those figures were later revised after audited financial statements, which LESCO says explains differences between earlier reported data and the latest position. This detail is important because circular debt figures can change when accounts are finalised.
LESCO also pointed to a zero-tolerance policy against overbilling and electricity theft. These two issues sit at the heart of public trust in distribution companies. Overbilling can inflate recovery performance on paper, while theft and technical losses can force paying consumers and the government to absorb financial gaps created elsewhere in the system.
| Indicator | Earlier Position | Latest / Target | Meaning |
| Circular debt | Rs. 339bn in FY2023-24 | Rs. 203bn in FY2025-26 | Reported improvement |
| Reduction | Two-year period | Rs. 136bn cut | Company claim |
| Bill recovery | Weak recovery risk | Near-100 percent | Supports cash flow |
| Future target | Current Rs. 203bn | Below Rs. 150bn | FY2028-29 strategy |
Three-Year Plan Targets Further Improvement
Looking ahead, LESCO says it has prepared a three-year strategy covering FY2026-27 to FY2028-29. The plan aims to reduce the company’s circular debt to below Rs. 150 billion. If achieved, that would mean a further reduction of more than Rs. 50 billion from the latest reported level.
The CEO said the company will continue focusing on line loss reduction, better bill recovery, transparency, accountability and improved consumer service. These priorities are closely connected. A distribution company cannot sustainably reduce debt if it improves collections through short-term pressure while customer service, billing accuracy or theft control remain weak.
The next phase will therefore be judged on consistency. A single strong recovery year is useful, but the power sector needs steady improvement across several years. LESCO’s reported numbers show progress, but they will carry more weight if future audited accounts confirm the trend and consumers see fewer billing disputes, better service and stronger theft control.
| Policy Watch: LESCO’s claim is positive for sector confidence, but independent audited data and future recovery performance will decide how strong the improvement really is. |
Disclaimer: This article is based on LESCO’s statement and reported figures. Final sector assessments may change after audited data and official power-sector reports.
