Govt plans to end existing gas, power subsidy slabs from July 2027

ISLAMABAD – Energy sector reforms have been accelerated to meet the conditions set by the International Monetary Fund (IMF), with plans to abolish the existing slab-based tariff structure and cross-subsidy system for gas and electricity consumers.

According to reports, the new electricity subsidy system is planned to take effect in January 2027, while a new subsidy system for gas consumers is being prepared for implementation from July 1, 2027.

The government has decided to restrict electricity and gas subsidies to eligible and low-income consumers.

Reports said the Power Division, with the support of the World Bank, has begun work on developing a socioeconomic registry of eligible consumers.

According to reports, the government aims to complete the registration of eligible consumers by November. After verification, consumer data will be linked to the records of the Benazir Income Support Programme (BISP).

The new registry will be used to identify consumers eligible for electricity and gas subsidies.

The government is preparing to abolish the tariff differential subsidy and cross-subsidy system for electricity by January 2027. Gas consumers will be linked to the socioeconomic registry from July 1, 2027.

Reports said electricity distribution companies (DISCOs) have submitted applications for base tariff adjustments.

The changes to the subsidy system are intended to reduce the burden of circular debt in the energy sector.

The IMF has also been briefed on preparations for the privatisation of electricity distribution companies and related reforms.