In a significant move impacting electricity consumers across Pakistan, the National Electric Power Regulatory Authority (NEPRA) has sanctioned a substantial additional charge on power consumption. The regulator has approved a surcharge of Rs 3.23 per unit (kilowatt-hour) as part of the quarterly tariff adjustment for the first quarter of the fiscal year 2024-25.
Purpose: Repaying Circular Debt Loans
The primary objective behind this new levy is to generate funds specifically for repaying loans that were acquired by the government to tackle the persistent issue of circular debt in the power sector. This financial burden, a long-standing challenge for Pakistan's economy, stems from a complex chain of unpaid bills among power generators, distributors, and consumers.
The government had previously taken on these loans as a stop-gap measure to keep the power system operational and ensure continuous electricity supply. Now, the cost is being passed on to end-users through this federally managed surcharge, which will be applied to electricity bills nationwide, except for consumers of K-Electric.
Regulatory Approval and Implementation
NEPRA issued its determination on a petition filed by the Central Power Purchasing Agency (CPPA). The authority conducted a detailed hearing where the financial mechanics of the power sector were reviewed. The approved Rs 3.23 per unit surcharge is a critical component of the quarterly adjustment mechanism, which allows for the recovery of variations in fuel costs and other factors from consumers.
This decision underscores the ongoing efforts to stabilize the country's energy sector by addressing its foundational financial woes. However, it directly translates to increased financial pressure on households and businesses already grappling with high inflation.
Impact on Consumers and the Energy Sector
The immediate consequence for all consumers, except those in the K-Electric service territory, will be higher monthly electricity bills. This surcharge will remain in effect for the designated adjustment period, adding a fixed extra cost to every unit of electricity consumed.
From a broader perspective, this move highlights the severe and lingering impact of circular debt on the national economy. While intended to clear legacy loans and improve the financial health of power companies, the strategy places the repayment responsibility squarely on the public. The success of this measure in permanently resolving the circular debt issue, rather than being a temporary fix, remains a key concern for economic observers.
This development is a stark reminder of the complex challenges within Pakistan's power sector, where financial sustainability and affordable energy for consumers are often in tension. The government and regulator continue to walk a tightrope between fiscal necessity and public affordability.
