Power Subsidy Plan
Power Subsidy Plan Prime Minister Shehbaz Sharif has constituted a high-level ministerial committee to rationalize subsidies in the power sector and gradually transition them into a targeted support system linked with the Benazir Program. This committee will be headed by the Federal Minister for Planning, Development, and Special Initiatives, Ahsan Iqbal.
This committee is headed by the Federal Minister for Planning, Development, and Special Initiatives, Ahsan Iqbal. Its members include Rana Sanaullah, Sardar Awais Ahmed Khan Leghari, Dr. Musadik Malik, Ahad Khan Cheema, Shazia Fatima, Khawaja Attaullah Tarar, Muhammad Ali, Bilal Azhar Kayani, Lieutenant General (Retd) Muhammad Zafar Iqbal, and Talha Burki. The committee will also include the Finance Secretary, the Chairman of NADRA, the Power Secretary, the Head of the Government Relations Unit (GRU) in the Prime Minister’s Office, and Dr. Sohail Anwar Chaudhry an energy expert nominated by the GRU.
Timeline and Objective
In accordance with the decision, the committee has been tasked with submitting its recommendations within two months from October 18, 2026, while the proposed reforms are set to take effect from January 1, 2027. The objective of these reforms is to transition away from the existing system of generalized electricity subsidies toward a targeted approach; under this new framework, eligible consumers specifically low-income households will be identified and distinguished, and subsequently provided with support through an appropriate mechanism.
This measure is part of broader efforts aimed at safeguarding public expenditure, improving existing control systems, and ensuring that subsidies reach only those who are truly entitled to them, rather than being distributed indiscriminately.
From General to Targeted Subsidies
The committee will review the existing subsidy structure, identify current flaws in the system, and propose a new mechanism to gradually phase out or restructure unjustified subsidies. It will also examine the institutional arrangements required to link electricity subsidy payments with the BISP database and the database of the relevant eligible beneficiaries.
The government is considering changes to the existing electricity subsidy system, including the relief currently provided to consumers who use up to 200 units per month. Under the proposed mechanism, eligibility will no longer be determined solely based on electricity consumption; instead, it will be assessed through a targeted evaluation of a household’s overall circumstances.
However, this transition will require the preparation of a reliable, registered list of eligible beneficiaries, the establishment of clear procedures for verifying these users, and the facilitation of effective coordination between the Power Division, the Finance Division, and the BISP. The roadmap for identifying beneficiaries and implementing these changes is currently being finalized. It is expected that the committee will also review the financial implications of the existing subsidy structure and propose measures to limit the fiscal burden on the government, while simultaneously protecting vulnerable consumers from sudden, sharp increases in their electricity bills.
The Subsidy Bill
Pakistan’s total subsidy bill is estimated at 1.9 trillion rupees, reflecting the immense pressure that subsidy commitments continue to exert on the federal budget. For the 2026-27 fiscal year, 830 billion rupees have been allocated for subsidies in the electricity sector.
The government is seeking to improve the efficiency of subsidy-related expenditures and refine the underlying mechanisms, with a focus on ensuring financial sustainability. According to Islamabad, these efforts are also consistent with commitments made under programs with international financial institutions, including the International Monetary Fund (IMF) and the World Bank.
Safeguards for Vulnerable Households
The committee will review existing arrangements, assess the impact of proposed changes on various demographic groups, and recommend a phased implementation plan. The objective is to ensure that, under any restructured subsidy system, appropriate safeguards are in place for vulnerable households.
It is expected that the focus will be on enhancing transparency in the selection of beneficiaries to ensure that government assistance reaches those who truly deserve it, and on fostering better coordination among various government departments responsible for managing these subsidies.
The committee’s recommendations will determine the transition timeline including the necessary institutional and administrative arrangements for implementing the proposed mechanism, effective from January 1, 2022. The government’s objective is to bring subsidy-related expenditures within a structured framework, while simultaneously ensuring that the assistance reaches those households that are most in need.
Source: Targeted power subsidies