The federal government is preparing a major overhaul of electricity and gas tariffs by shifting from usage-based slabs to an income-based pricing system, in line with ongoing reforms tied to the IMF program.
Under the proposed model, subsidies will be determined based on household income rather than consumption levels, marking a significant structural change in how energy prices are set.
Officials said the reform is being finalized as part of commitments made under the IMF’s Extended Fund Facility, which requires Pakistan to restructure its energy sector and reduce inefficiencies.
The plan is expected to replace the current system, where tariffs are linked to the number of units consumed. The new approach will introduce a mechanism to assess household income and allocate subsidies accordingly, potentially integrating with existing social protection systems.
This is intended to ensure that only deserving consumers receive financial support, while higher-income households pay closer to actual energy costs.
Pakistan is already in discussions with the IMF on revising electricity tariffs, with the Fund emphasizing that any changes should not burden lower and middle-income groups.
The reform agenda also includes reducing cross-subsidies and addressing circular debt in the power sector, which has been a long-standing challenge for the economy.
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