Govt plans hike in electricity prices to reduce circular debt

• Cabinet committee on energy approves revised circular debt plan.
• An increase of Rs2.17 per unit from July 1, 2023 in yearly basic tariff is estimated.
• Rs207 billion will be collected from increasing basic tariff by Rs2.17.

The federal government has planned to increase the power tariff to reduce circular debt, in addition, the cabinet committee on energy has approved a revised circular debt plan, Geo News reported on Wednesday.

Documents available to Geo News show the government is planning to increase basic tariff by 0.63 paisa/unit for February 2022.

As per documents, an increase of Rs2.17 per unit from July 1, 2023, in yearly basic tariff is estimated, while the circular debt will be reduced by Rs950 billion by June 2023.

The documents also show that the circular debt was at Rs2,476 billion till December 2021. It added that with the adjustments the debt will reduced to Rs2,280 billion by June 2022, and it will further decrease to to Rs1,526 billion by June 2023.

According to the documents, Rs85 billion will be collected by June 2023 with the help of the Rs0.63 per unit in electricity prices. While Rs207 billion will be collected yearly by increasing Rs2.17 in basic tariff.

In addition, line losses will also be minimised to reduce circular debt and measures will be taken to increase revenue.