Pakistan has assured the International Monetary Fund (IMF) that it will gradually phase out electricity subsidies for consumers using up to 200 units monthly and replace them with a targeted support system through the Benazir Income Support Programme (BISP) from January 2027.
According to official sources, the new mechanism forms part of broader power sector reforms aimed at reducing subsidy misuse and improving financial efficiency. Currently, some households reportedly use multiple electricity meters to remain within subsidized consumption limits.
Under the proposed framework, the government will replace the existing tariff differential subsidy and cross-subsidy system with targeted financial assistance for low-income consumers. Authorities will link eligible electricity users with the National Socio-Economic Registry (NSER) database to ensure accurate verification and transparent distribution.
Moreover, officials confirmed that the government will work closely with the World Bank to establish the verification and payment system before implementation begins in 2027.
Government expands digital reforms and irrigation tax collection
Alongside electricity reforms, the government plans to expand the digital e-Abiana irrigation service charge system to Sindh, Khyber Pakhtunkhwa, and Balochistan after its implementation in Punjab.
Officials stated that authorities aim to complete the rollout by August 2027 while also developing irrigation water tariff adjustment mechanisms in Punjab and Sindh with World Bank support.
Furthermore, the government plans to hire an external firm by the end of the current month to develop the payment mechanism for targeted electricity subsidies.
IMF board expected to approve additional funding
Sources confirmed that Pakistan expects approval of the second $200 million tranche under the IMF’s Resilience Sustainability Facility during the Executive Board meeting scheduled for May 8 in Washington.
Meanwhile, Pakistan has informed the IMF about progress on climate-related financial reforms. The State Bank of Pakistan and Securities and Exchange Commission of Pakistan have already issued guidelines concerning climate risk management and disclosure requirements.
Additionally, the government is working on a national disaster risk financing framework with IMF support to strengthen long-term financial preparedness.
Meta description: Pakistan plans targeted electricity subsidies through BISP while expanding IMF-backed reforms, digital taxation systems, and climate financing initiatives.
