ISLAMABAD: The government on Wednesday announced that the 3.23 rupees per unit debt surcharge on electricity consumers will remain in place for up to six years after notifying a revised uniform national base tariff for the current year without any change. The decision was shared by the Power Division alongside the notification covering all distribution companies and K Electric.
In an official statement the Power Division said the debt surcharge would be withdrawn once the circular debt in the power sector is fully cleared within a five to six year timeframe. The surcharge remains a key component of the government strategy to stabilise the power sector and manage legacy financial liabilities while maintaining tariff stability.
To provide relief to productive sectors the government has introduced a surplus power package allowing industrial and agricultural consumers to use additional electricity at a concessional rate of 22.98 rupees per unit for three years. Officials said this initiative has helped bring down average industrial tariffs and improve energy affordability for export oriented industries.
The division acknowledged that rapid growth in off grid and hybrid solar usage has distorted subsidy requirements. As a result the number of protected electricity consumers has doubled from 11 million in 2021 to 22 million. This shift has strained fiscal resources and increased the cross subsidy burden on commercial bulk supply and high consuming domestic users.
Addressing concerns over high energy costs cited as a factor behind foreign company exits the Power Division said it is exploring further measures including subsidy reforms and debt refinancing to reduce the burden on industrial consumers. It noted that the industrial cross subsidy has already fallen sharply from 225 billion rupees in March 2024 to 102 billion rupees at present.
The Power Division said industrial electricity tariffs including taxes declined from 62.99 rupees per unit in March 2024 to 46.31 rupees per unit by December 2025 while the national average tariff dropped to 42.27 rupees. It added that inefficient power plants were shut down and IPP contracts renegotiated with further talks under way to achieve additional tariff reductions.
