Pakistan has given written assurances to the International Monetary Fund that it will scrap its existing electricity subsidy structure for low usage consumers. The government will replace it with a targeted support mechanism from January 2027. Consequently, Pakistan to end 200 unit power subsidy scheme as part of power sector reforms tied to external financing. Under the planned overhaul, subsidies for households consuming up to 200 units of electricity will phase out. The new system will link directly to data from the Benazir Income Support Programme.

The new framework intends to direct relief toward low income households. It will also curb abuse of the current model. Some consumers have reportedly installed multiple meters to keep usage below the subsidized threshold. Therefore, Pakistan to end 200 unit power subsidy scheme to stop this exploitation. The commitment comes as Pakistan prepares to receive the second tranche of 200 million dollars under the Resilience and Sustainability Facility. The IMF Executive Board will meet on May 8 in Washington to consider the disbursement.

The government is developing the new subsidy mechanism in coordination with the World Bank. This will help link electricity users with the National Socio Economic Registry database. The targeted subsidy system will introduce after verification checks and payment arrangements. Pakistan to end 200 unit power subsidy scheme and replace it with a fairer system. The government plans to hire an external firm by the end of this month to design the payment mechanism.

Alongside electricity reforms, Pakistan has also committed to expanding its digital e Abiana irrigation service charge system to three more provinces. The nationwide expansion will complete by the end of August 2027. The measures form part of a broader reform package shared with the IMF under the first review of the Resilience and Sustainability Facility program.