Targeted power subsidies under BISP: Roadmap submitted to IMF, World Bank

ISLAMABAD: The government has reportedly submitted a roadmap to the International Monetary Fund (IMF) and the World Bank to extend targeted power subsidies to beneficiaries of the Benazir Income Support Programme (BISP), well-informed sources told Business Recorder.

The move is part of a broader energy sector reform aimed at reducing inefficient consumption, curbing losses, and supporting Pakistan’s climate mitigation goals. The current subsidy structure—characterized by blanket tariff differentials and cross-subsidies—has led to overconsumption and has often benefited wealthier consumers, undermining the sector’s financial viability.

The design has jointly been prepared by a Committee headed by PASS Division and issues and bottlenecks removed. Direct subsidy reform is also part of the RSF program of the IMF as a major reform measure.

IMF assured: Power, gas subsidies will be aligned with BISP

Accordingly, after a series of meetings between Power, BISP and the Finance Division and with the support of World Bank, a draft road map was prepared and shared with the IMF during recent meetings. As per the new timelines agreed with IMF identification and verification of eligible consumers to be completed by December 31, and June 2026, the government has to finalize the criteria and from FY 2027 budget there shall be no Tariff Differential Subsidy (TDS) but the allocation will be for direct subsidy to only eligible consumers and final timeline to shift on this roadmap is January 2027.

The sources said Minister for Power has taken the first review of roadmap and has directed Power Planning and Management Company (PPMC) to evaluate impact on consumers which is expected by mid-May 2025 followed by the plan to be presented to the Prime Minister after which Cabinet approval shall be initiated, expected by mid-June 2025.

The sources further stated that the government has assured the IMF that electricity and gas subsidies will be aligned with the BISP to ensure that only low-income households benefit from the relief, sources in the Finance Ministry revealed. A similar approach is under consideration for gas subsidies, with an assessment due by June 2026 to determine feasibility.

Additionally, to boost energy efficiency, Pakistan will enforce Minimum Energy Performance Standards (MEPS) for appliances such as fans, LEDs, refrigerators, ACs, and motors by June 2027.

New procurement regulations mandating MEPS compliance at federal and provincial levels will be introduced by December 2025. The National Energy Efficiency and Conservation Authority (NEECA) will begin quarterly reporting on MEPS adoption starting December 2025.

Copyright Business Recorder, 2025