Govt to align electricity, gas subsidies with BISP for targeted support, IMF assured

The federal government has committed to aligning energy subsidies with the Benazir Income Support Fund (BISP), ensuring that financial support is directed only to deserving consumers, Business Recorder reported citing sources from the Finance Ministry. 

This reform is part of broader efforts to adjust Pakistan’s energy sector policies in line with national climate goals and international commitments, including those to the International Monetary Fund (IMF).

By January 2027, the government intends to implement a new system for electricity subsidies that addresses the inefficiencies in the current subsidy structure. 

Currently, subsidies are often allocated broadly, benefiting higher-income households, which encourages overconsumption, energy wastage, and undermines the stability of the power sector. 

The new system will replace the existing tariff differential and cross-subsidy system, simplifying the tariff structure while using BISP to target eligible consumers.

The Finance Ministry has outlined a detailed roadmap for this transition, starting with the verification and identification of eligible consumers by January 2026. This will be followed by the definition of clear eligibility criteria and the establishment of a rebate mechanism through financial institutions by mid-2026. 

Additionally, a public communication campaign will begin by June 2025 to inform consumers about the new subsidy structure.

According to the report, the government is also looking to overhaul its gas subsidy system, which has similarly led to distortions and inefficiencies. As part of the broader reform agenda, a comprehensive analysis will be conducted to assess the viability of implementing a similar targeting mechanism for gas subsidies, with decisions expected by June 2026.

In addition to subsidy reforms, the government is focused on improving energy efficiency. This includes enforcing the recently introduced Minimum Energy Performance Standards (MEPS) for consumer appliances, with the goal of achieving compliance across various products such as fans, LEDs, refrigerators, air conditioners, and motors by June 2027. 

The Public Procurement Regulatory Authority will also ensure that all government procurements of these appliances meet the MEPS standards by December 2025.