The International Monetary Fund has reportedly agreed to extend electricity subsidies for protected consumers who use up to 200 units a month by another six months, sources said on Saturday. The understanding came out of talks between Pakistan and the IMF held last month, as the government sought further relief for consumers on the instructions of Prime Minister Shehbaz Sharif.
Under the proposed arrangement, the subsidy, which was due to end on December 31, 2026, could remain in place until June 30, 2027. That would allow the government to delay withdrawing it until July 1, 2027.
IMF’s earlier deadline and the proposed extension
The IMF had earlier set a target of ending the subsidy for consumers using up to 200 units from January 1, 2027. The government has reportedly managed to win a six-month extension of that timeline.
Sources also said the IMF wants the subsidy to be gradually restricted to households registered with the Benazir Income Support Programme (BISP). A similar limit has been proposed for subsidies on low gas consumption.
Power minister outlines plan to replace slab system
Last month, Power Minister Awais Leghari told the Senate that the government had decided to scrap the existing electricity slab system and introduce targeted subsidies for deserving consumers. Under the current setup, households using up to 200 units a month are classed as protected and receive a subsidy of roughly Rs13 per unit.
Consumers who exceed the limit by even a single unit, however, are charged up to Rs33 per unit and lose their protected status for the following six months. Speaking in the Upper House, Leghari said the government was speeding up efforts to end that arrangement.
He said two options were under consideration. One is raising the protected threshold from 200 to 250 units. The other is dropping the six-month penalty, so consumers could qualify in any month they keep their usage at 200 units or below.
Rising protected consumer numbers and solar use
The minister said the number of protected consumers had grown from around 10 million to between 20 and 25 million over the past two years, partly because of greater use of solar energy. He said many consumers, including households with monthly needs of 700 to 800 units, were using solar panels to cut their grid usage to 200 units and benefit from subsidies meant for low-income families.
“It would not be appropriate to offer equal discounts to everyone using less than 200 units,” Leghari said. He added that the government currently provides a subsidy of around 65 per cent to protected consumers, a benefit enjoyed by both affluent and low-income households.
According to the minister, the proposed new mechanism is meant to direct electricity subsidies toward people living below the poverty line and lower-middle-income households.
