Pakistan plans new electricity, gas subsidy system from 2027

Under the plan, a new electricity subsidy mechanism will be introduced in January 2027, while the revised system for gas consumers is expected to take effect on July 1, 2027. To improve transparency and efficiency, the Power Division has started work on a dedicated socioeconomic registry of eligible consumers with support from the World Bank.

Sources said the government plans to complete the registration of eligible consumers by November this year.

After data collection and verification, the information will be linked to the core records of the Benazir Income Support Programme (BISP), enabling authorities to identify those genuinely entitled to financial assistance and subsidies., the existing tariff differential subsidy and cross-subsidy system for electricity will be phased out by January 2027, while gas consumers will be linked to the same database from July 1, 2027.

The restructuring of the subsidy framework is aimed at easing the long-standing burden of circular debt on the energy sector. Sources said electricity distribution companies (DISCOs) had also submitted formal applications for adjustments to the base electricity tariff.

Meanwhile, the government has briefed the IMF on preparations for the privatisation of power distribution companies and administrative reforms. The measures are intended to help achieve the goals of permanently eliminating circular debt and improving the energy sector.