ISLAMABAD: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has urged the Power Division to abolish the cross-subsidy and Debt Service Surcharge (DSS) imposed on industrial electricity consumers.
In a letter addressed to the Power minister, FPCCI referred to a recent clarification issued by the Power Division in response to media reports on circular debt. The clarification stated that recent variations in circular debt are seasonal in nature and do not have implications for consumer-end electricity tariffs.
The Power Division further maintained that circular debt is being managed through a structured settlement and refinancing framework, and that the existing stock is being addressed separately from tariff determination.
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The FPCCI argued that the continued recovery of cross-subsidy — ranging from approximately Rs 4–7 per unit — and the PHL surcharge of Rs 3.23 per unit from industrial consumers is inconsistent with the ministry’s stated position. While the PHL surcharge may be recovered under a separate accounting head, the FPCCI said that in practical terms it also constitutes a form of cross-subsidy, as it imposes costs on industrial electricity consumption to finance obligations unrelated to current energy supply.
For industry, the FPCCI noted, distinctions between accounting or recovery heads are immaterial, as any charge recovered through the electricity bill directly adds to the cost of production. Industrial consumers are already paying tariffs higher than cost-reflective energy charges, and the continued imposition of additional levies has created a burden that industry is unable to absorb.
“The imposition of cross-subsidy and PHL surcharge defeats the purpose of any efficiency gains achieved by industry and undermines export competitiveness. A system that rewards losses and poor performance by using subsidies as a crutch, while penalizing efficient customers, will ultimately incentivise a shift away from grid utilities that are already under significant pressure,” the FPCCI stated in its letter.
The apex body of chambers and trade associations further emphasised that industrial consumers demonstrate near-100 percent bill recovery and minimal losses due to higher voltage supply, and therefore are not contributors to circular debt accumulation. Despite this, industry continues to shoulder a disproportionate share of non-energy costs through cross-subsidies and surcharges.
In light of the Power Division’s assertion that circular debt movements do not warrant tariff-level recovery, FPCCI has requested that:(i) the cross-subsidy component of approximately Rs 4–7 per unit be removed from industrial electricity tariffs; and(ii) the PHL surcharge of Rs 3.23 per unit be withdrawn for industrial consumers.
The FPCCI said these measures would align the tariff treatment of industrial consumers with the Ministry’s stated policy on circular debt management, cost-reflective pricing, and consumer-end tariff neutrality.
Copyright Business Recorder, 2026
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