The government signed a loan agreement of about 1.225 trillion rupees with 18 different banks to clear the outstanding dues of Independent Power Producers (IPPs). This loan will be repaid by collecting a surcharge of 3.23 rupees per unit from electricity consumers over the next six years. According to the agreement, the government can request the funds from the banks within 30 days to avoid penalties.

​Ministers lauded the agreement. The agreement was officially telecast in the presence of Prime Minister Shahbaz Sharif and Finance Minister Muhammad Aurangzeb. The Finance Minister hailed this move as a major success, stating that it will resolve the issues in the power sector. Prime Minister Shahbaz Sharif also called it a significant achievement, mentioning that circular debt is consuming all of our resources. He also discussed the future privatization of electricity distribution companies and the reduction of line losses.

​According to the Ministry of Finance, 659 billion rupees from this loan will be used to pay off the debts of Power Holding Limited (PHL), and the remaining 556 billion rupees will be given to IPPs and petroleum entities. This agreement is also expected to ensure the availability of cash in the sectors of agriculture, small and medium enterprises, housing, education, and health.

​According to a report, Pakistan’s energy sector has a circular debt of more than 4.6 trillion rupees. The Institute of International Finance in Washington reports that this debt in the energy sector is nearly 4 percent of the GDP, which puts significant pressure on public finances. Experts believe that this step will help in financial discipline and boost investor confidence.