Govt to end blanket power subsidy for under-200 unit consumers

May 07, 2026 (MLN): Pakistan is preparing a major overhaul of its electricity subsidy structure, with the government planning to phase out blanket relief for most residential consumers using less than 200 electricity units per month from January 1, 2027, as part of reforms linked to the International Monetary Fund (IMF) program.

According to officials involved in the discussions, the proposed move is part of a wider fiscal reform strategy aimed at increasing revenue collection, improving the tax-to-GDP ratio, and reducing untargeted subsidies that continue to burden the national exchequer.

At present, residential consumers falling below the 200-unit monthly consumption threshold receive subsidized electricity tariffs under a broad-based relief mechanism.

However, the IMF has asked Pakistan to gradually discontinue this blanket subsidy model and replace it with a targeted support system focused only on financially vulnerable households.

Under the new framework being finalized by the government, electricity subsidies would only be available to deserving families registered under the Benazir Income Support Programme (BISP).

The revised mechanism would rely on data from the National Socio-Economic Registry (NSER) to determine eligibility and ensure that subsidy support reaches low-income consumers instead of being distributed universally across all protected users.

The government, with technical support from the World Bank, is working on integrating electricity consumer records with the NSER database to electronically verify whether a household qualifies for subsidized tariffs.

A formal verification exercise is expected to begin after the integration process is completed.

Authorities are also reviewing cases involving multiple electricity meters installed at a single residence.

Officials believe some consumers intentionally divide electricity usage across different meters to keep monthly consumption below the 200-unit threshold and continue benefiting from lower tariff slabs and subsidized rates.

As part of the broader reform agenda, the federal government is also planning to gradually withdraw tariff differential subsidies and cross-subsidies in the power sector through the upcoming federal budget.

The revised subsidy regime is expected to become fully operational from January 2027.

Sources further revealed that the government is likely to appoint an external consultancy firm by the end of the current month to develop the payment and disbursement framework for the targeted subsidy program.

The planned reforms are expected to remain a key part of Pakistan’s ongoing negotiations and commitments under the IMF program, which emphasizes fiscal consolidation, energy sector reforms, and reduction in circular debt.

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