ISLAMABAD: Households and businesses across Pakistan are bracing for a steep increase in electricity bills next month, following the quiet expiry of the government’s much-trumpeted temporary power relief package.
The Rs 1.71 per unit subsidy, which had been in effect from April to June, expired on June 30. Consumers will feel the full impact when July consumption bills are issued in August.
Despite the federal government’s announcement of a revised average base tariff of Rs 31.59 per unit, down slightly from last year’s Rs 32.73, experts warn that the drop is cosmetic.
With fuel cost adjustments, taxes, and new surcharges — particularly the 10 percent debt service levy — most consumers will pay more, not less.
Parveen Bibi, a domestic worker in Rawalpindi, said her last subsidised bill was already difficult to pay. “It was Rs 7,400 in June. What will August bring? I don’t even want to open the bill.”
Small Cut, Big Burden
The new uniform base rate was approved by NEPRA on July 1 as part of the government’s ongoing IMF-backed tariff reforms. But the modest Rs 1.14 per unit cut is being overwhelmed by additional charges.
A 10 percent debt service surcharge has been added to recover a Rs 1.275 trillion syndicated loan the government secured from commercial banks to manage ballooning circular debt, which stood at Rs 2.444 trillion in January 2025.
As of mid-2025, the circular debt is hovering between Rs 2.4 and 2.5 trillion, depending on the month referenced.
According to Usman Tanveer, an independent energy consultant in Karachi, the relief was just a deferral.
“The base tariff may have dipped, but the net payable amount is going up — in some cases by 15 to 20 percent. The government has basically shifted more of the system’s inefficiencies onto consumers.”
Thermal Trap
Pakistan’s power affordability crisis has deep roots in decades of flawed energy planning. The national grid continues to rely heavily on expensive thermal generation, with over 59 percent of installed capacity coming from imported fossil fuels.
Although some progress has been made in renewable energy and nuclear power, thermal power still accounted for about 46 percent of actual electricity generation this fiscal year.
Transmission and distribution losses, meanwhile, stand at over 18 percent, among the highest in the region. These technical and commercial losses — including theft — are passed on to bill-paying consumers.
“The sector was deliberately skewed towards thermal because it served political and financial interests,” said Dr. Nida Asghar, an energy analyst based in Lahore. “The consumer has become the ultimate payer of elite contracts and mismanagement.”
Growing Anger
The looming hike is already fueling frustration. Retailers, shopkeepers, and small businesses say they are being crushed by fixed charges, fuel adjustments, and now the new circular debt servicing surcharge.
Ajmal Baloch, president of the All-Pakistan Traders Association, called the current pricing structure “economic cruelty” and warned of protests.
“Even if a shop remains closed, they get a Rs 5,000 to Rs 8,000 bill because of fixed charges and taxes. We are done paying for the government’s incompetence.”
The backlash could intensify in mid-August, when actual July usage bills hit — at the peak of summer consumption, when air conditioning and fans are essential for survival.
More to Come
While the subsidy has ended and surcharges are in place, more adjustments may lie ahead. The IMF, in its second review scheduled for August, is expected to press Pakistan to raise revenue further through energy pricing reforms.
The government has already indicated it may increase the surcharge beyond 10 percent if necessary.
A detailed breakdown of NEPRA’s tariff structure is expected within days, but early indications suggest that lifeline consumers — those using the least electricity — will see little protection.
Energy rights advocate Rashid Mughal said the country is now entering dangerous territory. “This isn’t just a billing issue anymore. It’s a national emergency. Electricity has become a luxury in a country that should be able to generate it cheaply and abundantly.”
High-Cost Summer
July bills due in August will likely be among the highest ever for domestic and commercial users. For millions of Pakistanis already struggling with food and fuel inflation, the power bill may be the tipping point.
At the heart of the crisis, there is a power sector riddled with losses, forex-indexed contracts, and short-sighted decisions that ignored hydropower and renewables in favour of quick, politically expedient fixes.
The cost of these choices is now being recovered through every electricity meter in the country.
