Pakistan 'plans' to collect Rs278bln on account of debt surcharge from power consumers

ISLAMABAD: The Pakistan government has planned to collect a whopping Rs278 billion debt surcharge from power consumers during the current fiscal year of 2025-26, ARY News reported on Tuesday, citing sources.

Sources in the Ministry of Finance stated that Rs156 billion from this amount is planned to be used to cover interest expenses, while Rs122 billion will be allocated for repayment of the principal amount.

According to finance ministry sources, repayment of the principal should ideally reduce the circular debt stock by an equivalent amount. However, this reduction is not reflected in the proposed circular debt management plan.

Electricity consumers are currently paying a debt service surcharge of Rs3.23 per unit, the sources said. The federal government has imposed this surcharge to facilitate repayment of circular debt in the power sector.

Earlier sources said the government is considering increasing the petroleum levy by Rs5 per litre as part of a strategy to settle Rs1.7 trillion in gas sector circular debt.

Under the proposed plan, the debt would be retired over the next six years by raising approximately Rs550 billion through additional levy collections, utilising dividends from state-owned gas companies, and diverting savings achieved by reducing the number of imported LNG cargoes.

The total gas sector circular debt currently stands at around Rs3.18 trillion, of which Rs1.7 trillion is planned to be settled under the strategy. Of this amount, approximately Rs1.4 trillion comprises non-recoveries, line losses, and tariff differentials, while about Rs300 billion relates to taxes and interest.