Power Minister Awais Leghari says circular debt has fallen to around Rs1.6 trillion, while the government plans to introduce income-based electricity subsidies.

ISLAMABAD: Minister for Power Awais Ahmed Khan Leghari told the Senate on Tuesday that annual losses of power distribution companies (DISCOs) had declined to Rs325 billion from Rs591 billion in 2024.

Responding to a calling attention notice moved by Abid Sher Ali, Leghari said circular debt had fallen from Rs2.4 trillion to approximately Rs1.6 trillion over the past two and a half years.

He said the government had refinanced Rs1.2 trillion of circular debt. Under the plan, the Rs3.23 per-unit debt servicing surcharge would be eliminated within four years, while the remaining circular debt would also be cleared.

The minister said DISCO losses had declined to Rs360 billion last year before falling further to Rs325 billion this year. Meanwhile, the Power Division’s budget support had decreased from Rs1,180 billion in 2024 to around Rs750 billion.

According to Leghari, the reduction in losses had lowered the government’s budget burden by approximately Rs200 billion.

He also highlighted electricity subsidies for low-consumption households, saying consumers using up to 200 units per month paid around Rs13 per unit against an actual cost of Rs35. This represented a subsidy of approximately 60 to 65 per cent.

The number of consumers benefiting from this relief had increased from 10 million to 22.5 million over two years, he added.

Leghari said the government was developing a targeted subsidy mechanism based on household income. The proposed system could extend eligibility to consumers using up to 250 units and link relief to monthly electricity consumption.

The minister estimated that developing the new mechanism would take around one to one-and-a-half months.

The proposed changes aim to better target electricity subsidies while reducing the financial burden associated with power-sector losses and circular debt.