Pakistan plans energy subsidy reforms amid industrial tariff demands

The Pakistani federal government is accelerating energy sector reforms to meet International Monetary Fund (IMF) conditions. The plan involves phasing out existing electricity and gas slab and cross-subsidy systems, replacing them with a targeted mechanism to assist only low-income consumers. A new electricity subsidy mechanism is slated for January 2027, followed by a revised gas subsidy system on July 1, 2027.

To implement these changes, the Power Division is working with the World Bank to develop a socioeconomic registry. This registry, targeted for completion by November, will link with Benazir Income Support Programme (BISP) records to identify eligible households. These reforms aim to reduce circular debt and are being pursued alongside plans for the privatisation of power distribution companies.

Concurrently, the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has called for further industrial electricity tariff reductions. FPCCI President Atif Ikram Sheikh urged the government to lower industrial rates to below 9 cents per unit to enhance export competitiveness and industrial production. While acknowledging recent reductions from 16 cents to 12 cents per unit, the FPCCI emphasized the need for uniform relief across all industrial categories.