ISLAMABAD: In a bid to arrest the spiraling circular debt in the power sector, the federal government has proposed a 10% surcharge on electricity bills, a move tied to its ongoing reform commitments under the IMF programme.
Announced by Finance Minister Muhammad Aurangzeb during the budget speech, the surcharge—termed the Debt Servicing Surcharge (DSS)—will be used solely for the repayment of principal debt, not interest or mark-up. The measure is part of a broader strategy to refinance and manage the existing liabilities in the energy sector without further worsening fiscal imbalances.
To implement this, the government has proposed amendments to the Nepra Act, allowing statutory authority to impose such surcharges in future. The surcharge will apply to power consumers nationwide, although officials indicate it may be applied selectively, based on fiscal and sectoral needs.
The circular debt, driven by structural inefficiencies, under-recoveries, and payment delays, has reached critical levels, jeopardizing the financial viability of state-run power producers and distributors. The government believes this targeted surcharge will provide temporary relief while broader energy sector reforms are rolled out.
