Govt plans targeted electricity and gas subsidies from 2027
- A new electricity subsidy system is planned for January 2027, followed by revised gas subsidies from July 1.
- Eligible consumers will be registered and their verified information linked to BISP records to identify low-income households.
- The proposed reforms aim to replace existing subsidy arrangements and reduce the energy sector’s circular debt burden.
The government is preparing to introduce a new subsidy framework for electricity and gas from 2027, directing financial assistance towards deserving, low-income consumers as part of energy reforms linked to International Monetary Fund conditions, according to sources.
The proposed electricity subsidy mechanism is scheduled to begin in January 2027, while the revised arrangement for gas consumers is expected to take effect on July 1, 2027.
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The changes would overhaul the existing slab-based and cross-subsidy systems. Under the plan, the current electricity tariff differential subsidy and cross-subsidy arrangements would be phased out by January 2027 and replaced with assistance based on consumers’ verified financial circumstances.
To identify eligible households, the Power Division has begun developing a dedicated socioeconomic registry with support from the World Bank. Sources said the government intends to complete consumer registration by November this year.
Once the information has been collected and verified, it will be linked to the Benazir Income Support Programme’s core records. The database is intended to help authorities determine which consumers qualify for subsidies and improve transparency and efficiency in providing assistance.
Gas consumers are expected to be connected to the same database from July 1, 2027, bringing both electricity and gas subsidy eligibility under a shared framework.
The restructuring is aimed at easing the persistent circular debt burden on the energy sector. Alongside these preparations, electricity distribution companies have submitted formal applications seeking adjustments to the base electricity tariff, sources said.
The government has also briefed the IMF on preparations to privatise power distribution companies and introduce administrative reforms. These measures form part of its efforts to eliminate circular debt on a lasting basis and improve the performance of the energy sector.
