KARACHI
Pakistan’s electricity consumers continue to pay for years of mismanagement and stalled reforms in the power sector, said Khurram Ijaz, Secretary General of the Businessmen Panel Progressive (BMPP) and former Vice President of the Federation of Pakistan Chambers of Commerce & Industry (FPCCI).
Citing the Auditor General of Pakistan’s (AGP) Audit Report 2025-26, Khurram Ijaz called on the federal government to immediately review the Debt Service Surcharge (DSS), arguing that the Rs3.23-per-unit levy has effectively become a tool for shifting the cost of institutional failure onto households and businesses.
“The audit lays bare an uncomfortable reality: instead of fixing the power sector, consumers are repeatedly being asked to pay for its failures,” he said.
He said the AGP’s findings expose a widening gap between the government’s reform agenda and the sector’s actual performance. Despite the National Electricity Policy and National Electricity Plan (2023-27) promising a competitive, consumer-focused and financially sustainable electricity market, the audit shows the sector posted deficits averaging 2.8 per cent of GDP between FY2014 and FY2024.
Mr. Ijaz noted that although circular debt fell from Rs2.39 trillion in June 2024 to Rs1.61 trillion by June 2025, the AGP found the decline stemmed largely from commercial borrowing and fiscal interventions, not the structural reforms repeatedly promised by policymakers.
“Reducing circular debt through borrowing is not reform — it simply postpones the problem while consumers continue to pay higher electricity bills,” he remarked.
The audit also flagged persistent operational inefficiency. Public sector distribution companies (DISCOs) recorded nearly Rs265 billion in transmission and distribution (T&D) losses and a further Rs132 billion in poor recoveries during FY2024-25 — a major driver of the country’s circular debt crisis, according to the report.
Khurram Ijaz said these figures show the real causes of the financial crisis remain unresolved.
“Consumers are paying more every year, yet electricity theft, technical losses, weak recoveries and poor governance continue almost unchecked. This cannot be called reform,” he said.
Khurram Ijaz also pointed to the AGP’s observation questioning the fairness of imposing the DSS on K-Electric consumers despite the utility not contributing to Pakistan’s circular debt, calling it an issue that raises fundamental concerns about transparency, fairness and consumer rights.
According to the audit, actual transmission and distribution losses climbed to 17.55 per cent during FY2024-25, against the National Electric Power Regulatory Authority’s (Nepra) approved benchmark of 11.77 per cent. Mr. Ijaz said widespread electricity theft, defective metering, inaccurate billing and delayed recoveries continue to drain billions of rupees from the sector, while law-abiding consumers face ever-rising tariffs.
He further warned that persistent overbilling complaints and billing inaccuracies have seriously eroded public confidence in electricity distribution companies.
Another major concern flagged by Mr. Ijaz is the country’s ageing and inadequate transmission network, which contributed to capacity payments of nearly Rs1.9 trillion during FY2024-25. He said repeated delays in strengthening transmission infrastructure have prevented Pakistan from fully utilizing available electricity generation, forcing consumers to bear the cost of an inefficient system.
While welcoming the proposed 800MW market allocation and wheeling initiative, he said its limited scale falls well short of the reforms needed to introduce genuine competition and reduce dependence on the single-buyer electricity model.
Mr. Ijaz stressed that Pakistan’s manufacturing sector cannot become globally competitive while electricity prices remain inflated by inefficiencies rather than actual production costs.
He called on the federal government to undertake a comprehensive review of the electricity tariff regime, immediately reconsider the Debt Service Surcharge, and implement long-overdue structural reforms — including stronger governance of DISCOs, aggressive anti-theft enforcement, accelerated transmission upgrades, improved billing systems, and greater private sector participation.
“Pakistan cannot continue asking consumers and industries to finance inefficiency,” he concluded. “Until structural reforms replace temporary fiscal fixes, electricity users will continue paying the price for failures they did not create.”
