ISLAMABAD: The federal government is planning to impose a 10 percent surcharge on electricity bills as part of efforts to reduce the growing circular debt in the power sector.

According to official sources, the proposed surcharge will be implemented through amendments to the NEPRA Act, enabling the legal framework required for its enforcement.

Reports suggest that a new mechanism will be introduced to ensure the successful execution of the plan. Once in place, the federal government will be empowered under the DSS (Debt Sustainability Strategy) to levy the surcharge.

The move is seen as part of broader fiscal reforms aimed at addressing structural issues in the energy sector and ensuring financial sustainability.

Energy experts have warned that the government’s plan to impose a 10 percent surcharge on electricity bills could be politically risky, though it is seen as a necessary move to revive the energy sector and stay on course with IMF-backed reforms.

The proposed surcharge, aimed at addressing the mounting circular debt, will require amendments to the NEPRA Act, allowing the federal government to impose the levy under the Debt Sustainability Surcharge (DSS) mechanism.

During his budget speech, Finance Minister Muhammad Aurangzeb stated that any surcharge imposed under the DSS would be used strictly for servicing the principal amount of the circular debt, managed through refinancing arrangements.

Analysts note that while the move may stabilize the sector financially, it could trigger public backlash due to the additional burden on consumers already grappling with high utility costs.