KARACHI: Pakistan's electricity consumers are enduring the consequences of prolonged mismanagement and unfulfilled reforms in the power sector, according to Khurram Ijaz, Secretary General of the Businessmen Panel Progressive and former Vice President of the Federation of Pakistan Chambers of Commerce & Industry (FPCCI).
According to Federation of Pakistan Chambers of Commerce and Industry, the Auditor General of Pakistan's Audit Report 2025-26 has prompted Khurram Ijaz to urge the federal government to reassess the Debt Service Surcharge (DSS). He emphasized that the Rs3.23-per-unit surcharge unfairly transfers the cost of systemic failures to consumers. The audit report highlights a discrepancy between governmental reform intentions and actual sector performance. Despite commitments under the National Electricity Policy and Plan (2023-27) for a competitive electricity market, the sector registered average deficits of 2.8 percent of GDP from FY2014 to FY2024.
Mr. Ijaz noted that while circular debt decreased from Rs2.39 trillion in June 2024 to Rs1.61 trillion by June 2025, this reduction was primarily due to commercial borrowing and fiscal measures instead of the promised structural reforms. He argued that borrowing merely delays addressing the underlying issues, resulting in higher electricity costs for consumers.
The report also identifies ongoing operational inefficiencies, with public sector distribution companies incurring Rs265 billion in transmission and distribution losses and Rs132 billion in poor recoveries during FY2024-25. These issues are significant contributors to the circular debt crisis. Mr. Ijaz further criticized the imposition of the DSS on K-Electric consumers, despite the utility not contributing to the circular debt, raising concerns about transparency and consumer rights.
The audit revealed that transmission and distribution losses reached 17.55 percent during FY2024-25, surpassing the benchmark set by the National Electric Power Regulatory Authority. Mr. Ijaz highlighted that electricity theft, defective metering, and billing inaccuracies continue to undermine the sector, burdening consumers with rising tariffs.
He also expressed concern over the country's outdated transmission network, which led to capacity payments of nearly Rs1.9 trillion in FY2024-25, and stressed the need for infrastructure upgrades to optimize electricity generation. Although he welcomed the proposed 800MW market allocation initiative, he emphasized that more comprehensive reforms are necessary to foster competition and reduce reliance on the single-buyer model.
Mr. Ijaz concluded by calling for a thorough review of the electricity tariff regime, urging the government to reconsider the DSS and implement essential structural reforms, including improved governance, anti-theft measures, transmission upgrades, billing improvements, and increased private sector involvement. He warned that without these changes, consumers and industries will continue to bear the financial burden of inefficiencies beyond their control.