The government has proposed adding a 10% surcharge on electricity bills to help reduce the growing circular debt in the power sector. To enable this, lawmakers will amend the NEPRA (National Electric Power Regulatory Authority) law. This amendment will allow the federal government to impose the surcharge under a new system called the Debt Servicing Surcharge (DSS).
Under this system, the surcharge collected will be used strictly to repay the existing circular debt. Finance Minister Muhammad Aurangzeb clarified in his budget speech that the surcharge funds will not be used for other expenses but solely for debt servicing. This move is part of a broader plan to refinance and organize the payment of overdue amounts.
Energy experts say the decision is politically sensitive but necessary to revive the energy sector and meet IMF-backed reforms. Alongside this, the 2025 budget also imposes an 18% tax on imported solar panels to regulate energy imports and encourage local production.
While the government hopes these steps will stabilize the power sector and improve financial health, critics warn the surcharge may increase consumers’ financial burden. The government, however, sees this as an unavoidable step to secure long-term sustainability in energy supply.