Millions of Pakistanis struggling with high electricity and gas bills may finally get some relief.
The federal government is reportedly preparing a major reform in the pricing system of electricity and gas. Instead of charging consumers purely based on units consumed, a new proposal suggests linking subsidies to household income.
If approved, this could significantly reduce the financial burden on low-income families.
What Is Changing in the Current System?
At present, electricity and gas tariffs are largely based on consumption slabs. This means:
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More units consumed = higher per-unit price
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Subsidy structure tied to usage levels
The proposed reform aims to shift the model from consumption-based pricing to income-based subsidy allocation.
In simple terms:
SubsidyLevel∝1/HouseholdIncomeSubsidy Level ∝ 1 / Household Income
This means lower-income households would receive higher subsidies, while higher-income households would pay closer to the actual cost of energy.
How Will the New Model Work?
Under the proposed system:
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Household income will be assessed
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Subsidy will be allocated accordingly
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Financial support will be limited to deserving consumers
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Higher-income families will gradually pay full cost
This model aims to ensure that government subsidies reach only those who genuinely need support.
Why Is This Reform Being Considered?
Pakistan’s majority population is currently facing:
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Heavy electricity bills
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High gas charges
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Rising inflation
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Income-pressure imbalance
In many cases, utility bills exceed monthly income for low-wage earners.
The government believes the current consumption-based model does not always accurately reflect a family’s financial capacity.
IMF Program Connection
Sources suggest that the proposed reforms are linked to Pakistan’s ongoing discussions with the International Monetary Fund (IMF).
Pakistan is already negotiating electricity tariff revisions under its IMF program.
The IMF has reportedly emphasized that any reforms must protect low- and middle-income groups from additional financial burden.
What This Means for Different Income Groups
Low-Income Households
✔ Likely to receive targeted subsidies
✔ Reduced monthly utility burden
✔ Better financial stability
Middle-Income Households
✔ Possibly protected from sharp increases
✔ Gradual adjustments
Higher-Income Households
✔ May pay closer to full energy cost
✔ Reduced blanket subsidies
Benefits of Income-Based Pricing
The proposed system could:
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Improve subsidy targeting
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Reduce misuse of government funds
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Lower fiscal pressure
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Ensure fairness in energy pricing
It may also help control circular debt in the power sector by reducing unnecessary subsidy leakage.
Challenges Ahead
Implementing income-based pricing will require:
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Reliable household income data
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Transparent verification systems
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Digital integration with tax and social databases
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Clear communication to avoid confusion
Without proper implementation, the system could face administrative challenges.
