Islamabad: The Federal Cabinet has approved Pakistan's largest financial scheme to restore financial stability in the power sector by eliminating circular debt of 1275 billion rupees.

The cabinet, which met in Islamabad on Wednesday with Prime Minister Mian Muhammad Shehbaz Sharif in the chair, took this historic step towards reforming the country's energy sector to address circular debt.

The scheme is aimed at eliminating the circular debt over the next six years without placing additional financial pressure on the national budget.

Under this scheme, 683 billion rupees of Power Holding Company's debt will be refinanced, and outstanding payments to Independent Power Producers will be settled.

This decision reflects the Government of Pakistan's commitment to implementing sustainable institutional reforms, reducing financial burdens, and restoring investor confidence in the energy sector.

It represents a significant milestone for Pakistan's economy and power sector, paving the way for long-term stability.