ISLAMABAD: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) raised objections to the Power Division’s latest circular debt report and accused the government of using accounting tactics instead of fixing inefficiencies in the energy sector.

FPCCI stated that the government shifted liabilities off balance sheets and increased payables to K-Electric while injecting taxpayer money to slow the growth of circular debt. The trade body argued that these injections disguised the burden of cross-subsidies on industries instead of removing structural flaws.

Rehan Javed and his research team at FPCCI shared an analysis with Nepra and leading business houses. They reported that net circular debt increased by Rs75 billion between July and December 2025 compared to Rs79 billion in the July-September quarter. The team concluded that cash flows remained weak despite government claims of improvement.

The government injected Rs224 billion in the first half of the fiscal year after spending Rs801 billion in FY25 to contain the debt. FPCCI said the government could have used this amount to eliminate cross-subsidies in industrial tariffs and reduce the debt burden more effectively.

The analysis emphasized that without these injections, circular debt would have risen sharply, proving the system remained cash-negative. FPCCI explained that the decline in payables to power producers resulted from timing differences and reclassification of liabilities rather than better collections or lower costs.

The trade body also pointed out a major accounting change. Liabilities previously listed as “amount parked in PHL” shifted to “CD Financing.” FPCCI said this change altered the presentation of debt but did not reduce total obligations.

This dispute highlighted growing friction between the government and industry. Businesses demanded transparency and long-term reforms instead of cosmetic adjustments in debt reporting.