The Power Division has prepared a comprehensive plan to reform electricity subsidies, under which consumers will gradually be charged the full price of electricity, while only eligible households will receive targeted support through the Benazir Income Support Programme (BISP).

The proposed reforms will also be shared with the International Monetary Fund (IMF) as part of ongoing discussions on tariff restructuring and fiscal discipline.

According to sources in the Power Division, future policy will require most consumers to pay the actual cost of electricity. Subsidies will no longer be broadly applied. Instead, only budgeted subsidies will be provided to eligible consumers identified through BISP data.

Officials say the division has already started collecting and verifying consumer data in collaboration with BISP to ensure that support reaches deserving households.

IMF to be briefed on tariff, subsidy reforms

The Power Division plans to brief the IMF on the recent tariff restructuring and the new subsidy framework. Sources said the move is aimed at improving transparency and reducing financial strain on the power sector.

Also Read: IMF mission to reach Pakistan on Feb 25 for 3rd economic review

Under the new approach, cross-subsidies — where certain consumer categories pay more to offset lower rates for others — will be phased out to prevent additional burdens on the sector.

No additional burden on power sector

Officials emphasized that no extra financial pressure will be placed on other consumers or the power sector through hidden cross-subsidies. Only subsidies allocated in the federal budget will be disbursed, and these will be strictly targeted at eligible beneficiaries.

The reform is part of broader efforts to streamline energy pricing and reduce inefficiencies.

Cross-subsidies in gas sector

The Power Division has also prepared plans related to cross-subsidies in the gas sector. Sources revealed that cross-subsidies in the gas sector amount to approximately Rs225 billion.

These cross-subsidies will be maintained in the upcoming budget, but the broader policy direction indicates that such mechanisms may eventually be abolished to ensure financial sustainability.