ISLAMABAD: If you are one of the many households using more than one electricity meter to keep your monthly bill below 300 units, the government’s latest deal with the International Monetary Fund (IMF) could change things for you.
Pakistan has promised to end untargeted electricity subsidies and instead provide relief only through the Benazir Income Support Programme (BISP) starting January.
What does this mean? This means the Rs. 500 billion currently spent on tariff differential subsidies will be withdrawn. For families who split their consumption across two or three meters to avoid higher tariffs, the cushion will disappear. Middle-income households not covered by BISP, as well as farmers relying on subsidised tube wells and residents of tribal areas and Azad Jammu & Kashmir, will also face higher costs.
Officials argue the change will help Pakistan’s finances and discourage wasteful electricity use.
The IMF has tied this reform to a $1.2 billion climate support loan, with $200 million expected to be approved this week. Finance Minister Muhammad Aurangzeb has also announced plans to float $250 million Panda bonds to fund environment-friendly and health projects, alongside loans from the World Bank and Asian Development Bank.
For consumers, the reform is a double-edged sword. On one side, the poorest households enrolled in BISP will receive direct cash transfers, ensuring targeted support. On the other, middle-class families and small farmers outside BISP’s safety net will feel the pinch as electricity bills rise.
