Pakistan has assured the International Monetary Fund (IMF) that it will overhaul its electricity subsidy system, ending the general subsidy on electricity consumption of up to 200 units and replacing it with a targeted support model.
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According to official sources, the new system will be introduced within eight months and fully implemented by January 2027. Under the revised framework, subsidies will no longer be universally available to all consumers using up to 200 units of electricity. Instead, assistance will be provided only to eligible households identified through official data systems.
“Pakistan has given written assurances to the International Monetary Fund (IMF) for abandoning the existing system of doling out subsidy on usage of 200 units and adopting a new targeted subsidy for power sector consumers from January 2027.
The targeted subsidy will be provided…
— Mehtab Haider (@haider_mehtab) May 7, 2026
The government plans to link electricity consumers with the National Socio-Economic Registry (NSER), which is based on data from the Benazir Income Support Programme. This integration is intended to ensure that only deserving households receive financial support, reducing misuse of subsidies.
Officials said the move is aimed at improving efficiency in the power sector and curbing practices where consumers install multiple electricity meters to remain within the subsidised consumption threshold. Authorities believe such practices have contributed to distortions in the subsidy system.
The government is also working with international partners, including the World Bank, to develop a more transparent mechanism for subsidy distribution. An external firm is expected to assist in designing and implementing the payment system.
In parallel, broader reforms are being planned in the irrigation and water pricing system, including expansion of the e-abiana model currently introduced in Punjab to other provinces such as Sindh, Khyber Pakhtunkhwa and Balochistan.
Officials also indicated that Pakistan is close to receiving the second tranche of $200 million under the Resilience and Sustainability Facility (RSF). The IMF Executive Board is scheduled to meet in Washington on May 8, 2026, to consider approval of the release.
Read More: Rethinking Pakistan’s Power Subsidy Regime
The proposed reforms reflect ongoing efforts by Pakistan to align fiscal policies with IMF requirements while improving subsidy targeting and reducing financial strain on the national budget.