The federal government plans to collect Rs278 billion in debt service surcharge from electricity consumers during the 2025–26 fiscal year, according to sources in the Ministry of Finance.
Officials said the government intends to use Rs156 billion of the collected amount to meet interest payments, while the remaining Rs122 billion will go toward repaying principal on power-sector liabilities.
Under standard financial practice, repayment of the principal should reduce the overall circular debt stock by an equivalent amount. However, sources noted that this reduction does not appear to be reflected in the proposed circular debt management framework for the upcoming fiscal year.
Currently, electricity consumers pay a debt service surcharge of Rs 3.23 per unit. The federal government imposed this charge to support repayments associated with the power sector’s circular debt.
Read: Pakistan Targets Zero Circular Debt Inflow for IMF $1.2bn Tranche
Separately, officials confirmed that the government is considering a Rs5-per-litre increase in the petroleum levy as part of a broader strategy to address Rs1.7 trillion in gas-sector circular debt.
Under the proposed plan, the government aims to retire this portion of debt over the next six years. The strategy involves raising nearly Rs550 billion through additional levies, utilising dividends from state-owned gas companies, and redirecting savings from cutting the number of imported LNG cargoes.
According to official estimates, the total circular debt in the gas sector stands at approximately Rs3.18 trillion. Of the Rs1.7 trillion targeted under the plan, around Rs1.4 trillion relates to non-recoveries, line losses, and tariff differentials, while nearly Rs300 billion consists of taxes and accumulated interest.
The proposed measures underscore the government’s continued reliance on consumer-linked charges to manage mounting energy-sector liabilities.
