Govt to Charge Extra Rs. 278 Billion from Electricity Users to Pay Off Circular Debt

Electricity consumers will continue to bear the financial burden of Pakistan’s power sector circular debt, as the government plans to collect Rs. 278 billion through a debt servicing surcharge during the current fiscal year, Finance Ministry sources informed ProPakistani. Sources said a major portion of this amount will be used to meet interest payments linked to the power sector’s mounting circular debt. Around Rs. 156 billion is expected to go toward servicing interest obligations, while the remaining Rs. 122 billion will be allocated for repayment of the principal amount. Sources in the Finance Ministry said that, in principle, repayment of the principal should reduce the overall stock of circular debt. However, the proposed Circular Debt Management Plan does not clearly indicate a visible decline in the total debt burden despite these repayments. At present, electricity consumers are paying a debt servicing surcharge of Rs. 3.23 per unit on their power bills. The surcharge was imposed by the federal government specifically to generate funds for the settlement of circular debt accumulated in the power sector over the years. Officials acknowledged that reliance on surcharges remains a key tool for managing the debt, but it continues to add pressure on consumers already facing high electricity tariffs and rising living costs. The issue has drawn concern as households and businesses struggle with increasing utility expenses. The Finance Ministry maintains that servicing the circular debt is necessary to prevent further disruption in the power sector, even though the financial impact is largely being passed on to electricity users.