Electricity bill tax could rise if Discos pass their income tax on to consumers. LESCO alone reportedly wants Rs20bn.

The electricity bill tax load on Pakistani households and businesses could grow again. Business Recorder reported on 25 October that the government has reportedly assured power distribution companies (Discos) that their income tax will be passed on to consumers through tariffs, whether a company makes a profit or a loss. The claim comes from industry sources and has not been officially confirmed. Lahore Electric Supply Company (LESCO) is reportedly seeking about Rs20bn under this head and Faisalabad’s FESCO faces an estimated Rs15bn liability.

The short version

• Discos would recover their income tax from consumers as a pass-through cost, industry sources told Business Recorder.
• The minimum turnover tax of 1.25% applies even when a Disco makes a loss; at a tariff of about Rs35 a unit it could add about 50 paisa a unit, the report says.
• Gas distributors reportedly pay 0.75%, with some cut to 0.2% after complaints.
• The plan is unconfirmed, and industry wants clarity before Discos are privatised.

What happened

According to the Business Recorder report, the minimum turnover tax (MTT) is charged on a Disco’s turnover rather than its profit, so a company can owe tax even when its accounts show a net loss. That tax is being treated as a pass-through cost in consumer tariffs. If a Disco reports a profit and its normal income tax exceeds the MTT, the electricity bill tax impact could be higher still. Industry sources also told the paper that the FBR directed HESCO, the Hyderabad company, to include government subsidies in the turnover on which MTT is charged, creating an extra demand of about Rs3bn.

Why it matters

Power bills are already climbing. BR Research reported on 26 October that fuel costs in September rose nearly 44% from a year earlier and that the requested fuel charge adjustment of Rs2.56 a unit was the highest since June 2024, a figure Knock-On covered in its look at the November electricity bill increase. The base tariff itself rests on a Rs27.31 power purchase price. Adding the Discos’ own tax to that stack means consumers would pay not only for power and its delivery, but also for the tax position of the companies that sell it.

The knock-on effects

First order: a small electricity bill tax rise per unit

About 50 paisa a unit, as Business Recorder estimates for MTT alone, is small next to a monthly fuel charge. But it would be permanent, and it adds up for factories and commercial users that consume millions of units.

Second order: weaker pressure to cut losses

If tax is recovered regardless of results, a loss-making Disco faces less pressure to improve. Industry representatives asked the paper why consumers should carry the tax of companies that “incur losses”.

Third order: a question for privatisation bidders

Industry wants to know whether a private owner’s profit tax would also be passed to consumers. That matters for the bidders now lining up for IESCO privatisation: a tax pass-through would make returns more predictable for buyers, and more expensive for users.

Who could benefit

• Discos: tax costs recovered without hurting their accounts.
• The FBR: more certain collection from power companies.
• Privatisation bidders: clearer, protected after-tax returns if the rule continues after sale.

Who may face pressure

• Industrial and commercial users: higher costs on large monthly consumption.
• Households in Lahore and Faisalabad: LESCO and FESCO have the largest reported amounts.
• Subsidised consumers: taxing subsidies, as reported at HESCO, reduces their value.

What to watch

• Official word: whether the Power Division or FBR confirms the pass-through.
• NEPRA tariff hearings: whether tax claims appear in Disco petitions.
• MTT rate: industry wants the 1.25% rate reviewed against the gas utilities’ lower rate.
• Privatisation terms: how tax is treated in the sale documents for the Discos now on offer, including IESCO.

Sources

• Business Recorder, Govt plans shifting Discos’ tax burden to consumers, 25 October 2026
• Business Recorder (BR Research), Keeping lights on gets pricier by the day, 26 October 2026

This is analysis, not investment advice. Figures are as of 26 October 2026.