The government has assured the International Monetary Fund that it will end untargeted electricity subsidies and move toward a new relief mechanism through the Benazir Income Support Program.
Sources in the Ministry of Energy say the plan could affect consumers using up to 300 units of electricity, as well as those using multiple meters to qualify for cheaper power.
Under the proposed plan, a subsidy of Rs500 billion will be transferred to the Benazir Income Support Program. Officials say this shift is aimed at replacing the current broad-based electricity subsidy system with a more targeted model.
Sources said all electricity consumers will be charged the full price of power under the new mechanism. Only low-income consumers registered with BISP will receive subsidy support.
This means the subsidy will no longer be automatically available through electricity bills for all protected or lower-consumption users.
Consumers using up to 300 units may be affected
Consumers using up to 300 units of electricity are likely to be affected by the change. Sources said those who use more than one meter to obtain cheaper electricity will also come under the new system.
The government plans to provide electricity subsidy only through BISP from January 2027.
Sources in the Ministry of Energy said the number of protected consumers has increased sharply from 10 million to 22 million. Officials believe one reason for this rise is the use of two to three electricity meters by some consumers to remain within lower consumption slabs.
This increase has prompted the government to review the existing electricity subsidy structure and develop a new targeted mechanism.
Power Division to show subsidy details in bills
The Power Division has also decided to make public the subsidy being provided in electricity bills. Officials said future bills should show the actual price of electricity along with the subsidy amount.
The move is intended to improve transparency and help consumers understand the real cost of electricity supply.
Power Division officials said a new mechanism is being developed to end the existing subsidy system. The government will test the new subsidy system by August.
As part of the plan, electricity consumer data will be linked with the BISP registry to identify eligible low-income households.
Energy reforms linked with environmental goals
The government has also assured the IMF that energy reforms will be linked with environmental goals. Officials said Pakistan will issue a $250 million Panda Bond for environmentally friendly projects.
The financing is expected to support green and climate-focused development initiatives.
Sources said the government also plans to collect digital irrigation tax from farmers from next year. The amount collected through the tax will be used to completely digitalize the irrigation system.
Officials said this measure is part of broader reforms aimed at improving resource management and climate resilience.
Climate priority in development projects
The government has promised to increase climate priority in development projects by 30%. Pakistan has also called for a modern system to deal with climate risks.
Officials say the country needs updated tools, stronger planning and climate-sensitive reforms to manage future environmental and economic challenges.
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