Govt to replace subsidy with targeted support mechanism through BISP from Jan 2027
ISLAMABAD
Pakistan has assured the International Monetary Fund (IMF) that it will phase out the existing electricity subsidy for consumers using up to 200 units per month and introduce a targeted support mechanism through the Benazir Income Support Programme (BISP) from January 2027 as part of broader power sector reforms.
This change of subsidy mechanism will be a difficult decision for the politically elected regime, as currently there are households in the country who have installed two to three meters to curtail their power consumption to less than 200 units from each electricity meter. The targeted subsidy will help curb the misuse of this subsidy.
The government will also replicate the collection of e-Abiana irrigation service charges (water tax on irrigation) from three provinces, including Sindh, Khyber-Pakhtunkhwa and Balochistan, from the next financial year after implementing it in Punjab. The government is working to develop a mechanism for an electricity subsidy, which will be implemented from January 2027.
“This will replace the budgeted tariff differential subsidy and cross-subsidy system with a targeted budgeted subsidy framework for low-income consumers via BISP,” said the official. The government will devise a mechanism and work closely with the World Bank to link electricity consumers to the National Socio-Economic Registry (NSER) database. This linkage will be developed, and validity checks will be in place after which the targeted subsidy will be implemented, said the official.
