Pakistan’s business community has come down hard on the government for what they describe as misplaced celebrations over the continuation of the Debt Service Surcharge (DSS) of Rs3.23 per kilowatt-hour (kWh) for the next six years. The surcharge, a non-tariff burden on electricity consumers, is meant to finance the repayment of a Rs1.225 trillion loan being raised from 18 commercial banks as part of the government’s attempt to contain the circular debt crisis.
The issue came under heated discussion during a public hearing organized by the National Electric Power Regulatory Authority (NEPRA). The session was held to seek feedback from stakeholders on the proposed positive adjustment of Rs0.1911/kWh under the Fuel Cost Adjustment (FCA) mechanism for August 2025. NEPRA Chairman Waseem Mukhtar presided over the hearing, where stakeholders expressed deep concerns about the long-term implications of the surcharge.
At the hearing, Central Power Purchasing Agency – Guarantee (CPPA-G) Chief Executive Officer Rihan Akhtar informed participants that the negative adjustment of Rs1.79/kWh applicable in September 2025 would come to an end, with a positive adjustment of Rs0.1911/kWh set to be charged. This change translates into a net increase of Rs1.98/kWh for consumers of both distribution companies (DISCOs) and K-Electric, leading to an additional financial burden of over Rs27 billion to be recovered in October 2025 electricity bills. The cost, he explained, was primarily driven by technical limitations in the national transmission system.
NEPRA Member (Technical) Rafique Ahmad Shaikh expressed dissatisfaction with the repeated practice of transferring inefficiencies to consumers. “Why should the consumers pay the price for inefficiencies in the system?” he questioned, highlighting frustration among regulators as well as consumers. Tensions escalated further when Rafique Shaikh scolded a representative from M/s Zong for asking questions deemed irrelevant to the matter.
From Karachi, consumer advocate Rehan Javed raised a pressing concern regarding the DSS mechanism. He asked whether the surcharge rate of Rs3.23/kWh would increase further if the circular debt stock swelled beyond current levels. He pointed out that consumers are already paying the DSS as a non-tariff charge and argued that celebrating the continuation of this burden for six more years was unjustified. “We are very disappointed with the celebration of new loans to be repaid from the DSS of Rs3.23/kWh, which has been imposed on the consumers. Is there any justification for celebrations?” he remarked.
In response, CPPA-G’s CEO avoided commenting on administrative matters, such as reported celebrations at the Prime Minister’s Office. However, he elaborated on the technical structure of the new loans, explaining that they were linked to the Karachi Interbank Offered Rate (KIBOR), priced at KIBOR minus 19 basis points with a floor mechanism. He added that if KIBOR rates fell, the repayment burden would decline, but if KIBOR rose above 14 percent, banks would be required to absorb the additional cost instead of passing it onto consumers.
The continuation of the DSS highlights the ongoing fragility of Pakistan’s energy sector and the heavy reliance on consumer surcharges to finance large-scale borrowing. For businesses and consumers alike, the six-year extension of this surcharge raises concerns about rising production costs, reduced competitiveness, and growing frustration over systemic inefficiencies that remain unresolved.
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