The government has finalised a plan to replace the existing electricity subsidy regime with a targeted support system under the Benazir Income Support Programme (BISP) from January 2027 as part of broader reforms agreed with the International Monetary Fund. Sources in the Prime Minister’s Office said Pakistan has formally assured the IMF that the current power subsidy structure including tariff differential and cross-subsidy mechanisms will be phased out in favour of a data-driven model aimed at supporting only low-income households.

Under the new framework, electricity subsidies will be linked to verified socio-economic information available through the National Socio-Economic Registry (NSER) and BISP databases. Officials say the move is intended to improve transparency and prevent misuse of subsidies. Authorities believe the current system has been vulnerable to manipulation, with some consumers allegedly using multiple electricity meters to remain below subsidised consumption thresholds.

The new mechanism is expected to eliminate such practices by directly tying eligibility to household income data. With technical support from the World Bank, the government is integrating electricity consumer records with the NSER database to authenticate beneficiaries. A foreign consultancy firm is also expected to be appointed later this month to develop the operational structure for subsidy disbursement.

Credit: Independent News Pakistan (INP)