Pakistan has informed the International Monetary Fund that the existing 200-unit power subsidy will gradually end and a new targeted support system will be launched through the Benazir Income Support Programme from January 2027.
The decision is part of broader power sector reforms agreed with the IMF. The government believes the new system will reduce misuse of electricity subsidies and ensure support reaches low-income households more effectively.
At present, many consumers keep their monthly electricity usage below 200 units to qualify for subsidised rates. Officials say some households even use multiple electricity meters to continue receiving the benefit. The new targeted model aims to stop this practice.
Under the revised plan, the government will replace the current tariff differential and cross-subsidy structure with a direct assistance mechanism linked to BISP. The 200-unit power subsidy will therefore shift from a general relief model to a more focused welfare programme.
Officials said the government is working with the World Bank to connect electricity consumers with the National Socio-Economic Registry database. This system will help verify eligible households before the subsidy programme starts in 2027.
Authorities are also expected to hire an external firm by the end of this month to develop the payment and verification mechanism for the new subsidy structure.
Alongside the 200-unit power subsidy reforms, the government plans to expand the digital e-Abiana irrigation service charge system to Sindh, Khyber Pakhtunkhwa and Balochistan. Punjab has already implemented the system.
The rollout in the remaining provinces is expected to complete by August 2027. Officials said the government is also preparing a water tariff adjustment mechanism in Punjab and Sindh with support from the World Bank.
Sources confirmed that Pakistan is likely to receive the second tranche of $200 million under the IMF’s Resilience Sustainability Facility after the Executive Board meeting scheduled in Washington.
Pakistan has also updated the IMF on several reform measures already introduced under the programme. These include climate-related financial risk guidelines issued by the State Bank of Pakistan and disclosure guidelines introduced by the Securities and Exchange Commission of Pakistan.
The government is also working on a national framework to coordinate federal and provincial disaster risk financing needs with IMF support.