In a move likely to add to the public’s financial burden, the government is set to raise gas, electricity, and oil prices in the upcoming 2025–26 budget to meet key conditions set by the International Monetary Fund (IMF), Samaa News reported on Sunday.
According to official documents, the electricity tariff will undergo annual rebasing starting July 1, 2025, while gas tariff adjustments are scheduled for July 1, 2025, and February 15, 2026. Additionally, a carbon levy of Rs 5 per litre will be imposed on petrol and diesel from July 1. Provincial governments will also refrain from offering any subsidies on electricity and gas under the agreed terms, the report added.
Under the plan, a loan of Rs 1252 billion will be taken from banks to repay the circular debt in the energy sector. This amount will be collected from electricity consumers in the next 6 years to repay the debt. For this purpose, a 10 percent debit service surcharge will be collected. In case of shortfall, the government will have the authority to increase the rate of debit service charge.
The new budget will reduce the subsidy amount for electricity consumers, and circular debt repayment will be brought to zero by 2031. Nepra will continue to issue tariff adjustment notifications on a quarterly basis, and monthly fuel cost adjustments will also be implemented in a timely manner.
The gap between the base tariff and actual revenue requirements will be closed, no additional burden of electricity tariff will be placed on weak or poor consumers, only targeted subsidies will be provided in the electricity sector.
According to the document, the new circular debt management plan will be announced in July with the approval of the cabinet. As of January 2025, the stock of circular debt in the electricity sector was Rs2,444 billion, while the volume of circular debt in the gas sector was recorded at Rs2,294 billion by June 2024. Reforms will continue to control circular debt.
According to the document, cost recovery will be improved to reduce prices in the energy sector, and arrears of Rs348 billion will be cleared through negotiations with IPPs by June.
