Electricity consumers in Pakistan are to continue financing the power sector’s circular debt, as the government plans to raise Rs 278 billion this fiscal year.
Finance Ministry sources said most of the amount collected through a debt servicing surcharge will be used to cover interest linked to mounting liabilities.
According to officials, around Rs 156 billion is earmarked for interest servicing, while the remaining Rs 122 billion will go toward principal repayment.
Officials noted that, in principle, paying down principal should lower the circular debt stock, but the management plan shows no clear overall reduction.
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Electricity users are currently charged a debt servicing surcharge of Rs 3.23 per unit, imposed to fund settlement of accumulated power sector debt.
Government officials acknowledged surcharges remain central to managing the debt, yet they add pressure on households and businesses facing high tariffs costs.
The Finance Ministry says servicing circular debt is essential to avoid disruption in the power sector, despite the burden largely falling on consumers.
