ISLAMABAD: The government on Wednesday announced that the Rs3.23 per unit debt surcharge on electricity consumers would continue for up to six years as it notified a revised uniform national base tariff for the current year without any change.
In a statement issued on the sidelines of the revised tariff notification for all distribution companies (Discos) and K-Electric, the Power Division said the debt surcharge, currently charged at Rs3.23 per unit, would be withdrawn in five to six years once the circular debt is cleared.
“Once the circular debt is cleared, the debt surcharge currently charged at Rs3.23 per unit will be withdrawn, providing further tariff relief to consumers,” it said, adding that the government had introduced a surplus power package under which industrial and agricultural consumers can avail additional electricity at a concessional rate of Rs22.98 per unit for three years, helping reduce average industrial tariffs.
In addition, a circular debt settlement plan has been launched to eliminate outstanding debt within five to six years.
The Power Division also conceded that the growth of off-grid solar consumption had distorted subsidy requirements, with the number of protected consumers doubling from 11 million in 2021 to 22m recently due to hybrid consumption patterns.
“This has not only strained fiscal resources but has also increased the cross-subsidy burden on industrial and commercial users, undermining their competitiveness,” it said, adding that commercial, bulk supply and high-consuming domestic consumers were currently bearing a significantly higher cross-subsidy burden than the industrial sector.
Responding to criticism over higher energy costs — also highlighted by Finance Minister Muhammad Aurangzeb as one of the key reasons for the exit of foreign firms from Pakistan and export challenges — the Power Division said it would explore additional options to further reduce the cross-subsidy burden on industrial consumers, including subsidy reforms and debt refinancing, in addition to the tariff reduction measures already in place.
It added that data showed the industrial cross-subsidy burden had been reduced from Rs225 billion (Rs8.9 per unit) in March 2024, when the current government assumed office, to Rs102bn (Rs4.02 per unit) at present, reflecting a reduction of Rs123bn.
“Industrial electricity tariffs (including taxes) have declined from Rs62.99 per unit in March 2024 to Rs46.31 per unit in December 2025, while the national average tariff has fallen from Rs53.04 to Rs42.27 per unit,” it said.
Moreover, to reduce electricity tariffs, the government has terminated inefficient power plants and successfully renegotiated contracts with independent power producers (IPPs). These measures have resulted in tariff reductions, and further negotiations with the remaining IPPs are underway, the Power Division said.