ISLAMABAD: Consumers of K-Electric (KE) are being billed Rs3.23 per unit under the Debt Servicing Surcharge (DSS) — a levy imposed to repay loans raised by the Power Division to manage the country’s mounting circular debt, even though KE has played no role in creating it, the utility and energy experts have said.
The surcharge, applied under the head of Power Holding Limited (PHL), is tied to Rs1.225 trillion borrowed by the federal government from 18 commercial banks to address the growing financial shortfall in the power sector. The measure, however, extends to KE’s consumers in Karachi and adjoining areas — despite the utility being a privately operated company with no direct link to the debt owed by state-run power distribution companies (DISCOs).
“This policy effectively penalizes Karachi’s consumers for inefficiencies they had no hand in creating,” said Rehan Javed, an energy expert based in Karachi. “It raises serious concerns about fairness and the long-term sustainability of Pakistan’s power sector reforms.”
According to official sources, the ex-Wapda DISCOs continue to incur massive annual losses — estimated at Rs399 billion — due to electricity theft, poor recoveries, and inefficiencies. Although this figure has decreased from Rs589 billion, analysts warn that the circular debt will rise again within five years if reforms fail, potentially violating Pakistan’s commitments to the International Monetary Fund (IMF).
When contacted, a Power Division spokesperson defended the surcharge, saying: “We have a uniform tariff across the country — applicable tariff across the country is the same.”
Energy analysts, however, argue that the justification conflates two different mechanisms. While tariff differential subsidies are financed by the federal budget to maintain a uniform national tariff, the Debt Servicing Surcharge is meant solely to service loans raised to offset losses caused by public-sector inefficiencies — a burden that should not fall on KE’s private-sector consumers.
For now, KE consumers remain caught in what many describe as a policy imbalance — paying for a debt they did not cause, in a system still struggling to achieve financial and operational stability.
Story by Khalid Mustafa
