The federal government is likely to impose a Rs. 3.23 per unit electricity surcharge for FY26 to finance a Rs. 1.25 trillion debt restructuring plan aimed at reducing circular debt.
According to a report by AKD Securities, the surcharge will cover both principal and interest repayments, replacing the previous surcharge, which funded only interest.
The new debt arrangement will replace high-cost borrowing such as PHPL loans (KIBOR+2%) and IPP payables (up to KIBOR+4%)—with cheaper debt at KIBOR–0.9%, saving around Rs. 200 billion annually.
The FY26 federal budget also allocates Rs. 250 billion to support the plan.
Separately, NEPRA has cut the average base tariff by Rs. 1.50/kWh for FY26, setting it at Rs. 34.0/kWh—down 4 percent from Rs. 35.5/kWh in FY25.
The cut reflects a Rs. 212 billion reduction in the Power Purchase Price (PPP), including:
The approved revenue requirement stands at Rs. 3.52 trillion, down Rs. 247 billion year-on-year. NEPRA has also included Rs. 58.7 billion (Rs. 0.38/kWh) in prior year adjustments. To maintain uniform tariffs across DISCOs and K-Electric, the government will provide a Rs. 249 billion subsidy.
Structural reforms such as early IPP retirements, tariff renegotiations, and industrial captive gas tariff hikes (Rs. 41.9/kWh vs grid at Rs. 32.6/kWh) are expected to shift load to the grid and reduce costs. AKD expects tariffs to remain stable over the medium term, supported by demand growth, captive diversion, lower capacity costs, and anti-theft efforts.