Summary Pakistan assures IMF of targeted power subsidy reforms, plans to end general subsidy for 200-unit users from January 2027 under new BISP-based mechanism
ISLAMABAD (Dunya News) - The federal government has decided to abolish the current electricity subsidy mechanism for power consumers and replace it with a new targeted subsidy system.
According to sources in the Ministry of Finance, preparations are underway to implement the new system from January 2027, under which electricity subsidies will be provided through the Benazir Income Support Programme (BISP). Only eligible and deserving consumers will be identified on the basis of BISP data.
Officials said Pakistan has reached an agreement with the International Monetary Fund (IMF) on changing the subsidy mechanism, and a written assurance has been provided regarding reforms in the power sector subsidy system.
New targeted subsidy framework
Under the new system, tariff differential and cross-subsidy arrangements will be discontinued. The reform aims to eliminate misuse of subsidies, including the practice of using multiple electricity meters to keep consumption below threshold limits.
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Authorities will link electricity consumers with the National Socio-Economic Registry (NSER), while the World Bank will assist in developing a verification system for identifying eligible beneficiaries. An external firm is also expected to be hired this month to manage subsidy payments.
Wider reforms in irrigation system
Sources said reforms will also extend to the irrigation sector, where an e-Aabiana system will be introduced nationwide. The system is already operational in Punjab and will now be expanded to Sindh, Khyber Pakhtunkhwa, and Balochistan.
IMF programme update
Officials confirmed that the IMF Executive Board is scheduled to meet tomorrow to approve a $1.2 billion loan tranche for Pakistan.
