Pakistan has agreed with the International Monetary Fund (IMF) to phase out untargeted electricity subsidies and replace them with a targeted support system. According to Beyond Time News, the new mechanism will route assistance through the Benazir Income Support Programme (BISP) by January next year.
The decision is part of broader energy sector reforms under a $1.2 billion IMF climate financing program.
Subsidies to Be Limited to Eligible Households
Under the new policy, electricity subsidies will no longer be available broadly to all residential consumers. Instead, support will be restricted to low-income households identified through BISP.
According to Beyond Time News, the change aims to improve targeting, reduce misuse of subsidies, and ensure financial support reaches deserving families.
Rs500 Billion Shift in Subsidy Spending
The government plans to gradually redirect around Rs500 billion currently used for electricity subsidies. According to Beyond Time News, these funds mainly support low-consumption households, agriculture, and selected regional categories.
Officials say the reform will help reduce pressure on the power sector and align pricing with actual consumption.
IMF Seeks Major Overhaul of Pakistan’s Sovereign Wealth Fund Powers
IMF-Linked Energy Reforms
The subsidy restructuring is part of Pakistan’s commitments under the IMF’s climate resilience program. According to Beyond Time News, Pakistan has also agreed to improve energy efficiency standards and strengthen climate-related financial governance.
Finance officials said a $200 million IMF tranche is expected soon under the program.
Implementation and Data Challenges
Authorities are working on refining the targeting system before full rollout. According to Beyond Time News, one key challenge is that the current BISP database covers fewer households than the total number of electricity consumers benefiting from subsidies.
A verification system is expected to be tested before implementation.
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