Pakistan has informed the International Monetary Fund (IMF) that it plans to change its electricity subsidy system. Under the current setup, households that use up to 200 units of electricity every month receive a subsidy to help lower their bills. However, this support will be stopped in January 2027.
Pakistan to End 200-Unit Power Subsidy Scheme on Demand
The government says this decision is part of its wider economic reform plan. The main purpose is to reduce financial pressure on the power sector, which has been facing rising costs and debt. Officials also believe that the new approach will make the subsidy system fairer and better targeted so that support is given to the people who need it the most. The move comes as the government also continues working on public support programs such as the electric bike subsidy scheme aimed at helping citizens manage rising costs.
BISP-Based Targeted Electricity Subsidy System
Under the new plan, the current “one system for all” electricity subsidy will be removed. This means that instead of giving the same benefit to all households using up to 200 units, the government will change the system completely. In its place, a targeted support system will be introduced. This new method will focus only on helping families who are financially weak. The system will be linked with the Benazir Income Support Programme (BISP) so that only registered low-income households can receive the subsidy.
Officials say this change will make the process fairer and more controlled. It will help ensure that financial support goes directly to people who truly need it, while also reducing unnecessary spending of public funds. Authorities have also identified issues in the current electricity subsidy system. Some consumers are reportedly using more electricity than allowed but still managing to stay within the 200-unit limit by using multiple electricity meters.
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Because of this practice, they can get cheaper electricity unfairly, even when their actual usage is higher. The government says this creates an imbalance in the system and affects those who genuinely need support. To solve this problem, officials believe the new subsidy system will help stop such misuse. The aim is to make the process fairer, more transparent, and better controlled for all users, similar to how targeted welfare initiatives like the Ehsaas petrol subsidy program are designed to support eligible people more accurately.
IMF-Backed Reforms Aim to Improve Power Sector and Reduce Debt
This change is part of a larger set of reforms supported by the International Monetary Fund (IMF). These reforms are aimed at improving Pakistan’s power sector. The main goals include better electricity bill collection, reducing losses, and lowering the growing debt in the energy system. The government is also planning to introduce new digital systems and update electricity pricing rules. These changes are designed to make the system more transparent and easier to manage. Officials believe this will also help improve long-term stability in the energy sector.
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Along with these steps, Pakistan is expected to receive $200 million under an IMF support program. This funding will be released after the program review is approved. The government is working with the World Bank to develop a more advanced system for monitoring electricity users. This system will link electricity usage data with national records so it can be checked more accurately: Who is eligible for subsidy support?
Along with this, an external company will also be hired to design a new payment system for the updated subsidy model. These steps aim to make the process more accurate, transparent, and easier to manage. Along with electricity changes, Pakistan is also improving other systems, like water charges and climate risk planning. New digital systems for irrigation fees will expand to more provinces by 2027. The government is also working on better planning for disaster risks and financial protection.
Pakistan’s electricity subsidy reform is a major change in the energy system. The goal is to help only those who truly need support, reduce misuse, and improve the financial health of the power sector under IMF-backed reforms. News source eTimes Pakistan.
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