Naeem Afzal
Pakistan spends hundreds of billions of rupees annually on electricity subsidies, but a fundamental question remains: are these subsidies reaching the households that genuinely need them? The government’s proposed move towards digital registration and targeted subsidies is an attempt to address this problem. However, the proposed mechanism raises concerns about accessibility, fairness and the criteria used to determine eligibility.
The growing number of protected electricity consumers has exposed weaknesses in the existing consumption-based subsidy system. According to the figures presented, protected consumers increased from 9.4 million to 21.5 million over the past three to four years, while the subsidy allocated to them rose from Rs199 billion to Rs423 billion. By FY2026, approximately 86 per cent of registered residential consumers were benefiting from some form of subsidy.
This expansion raises legitimate concerns about whether the existing system is adequately identifying deserving households. Some relatively affluent households may be benefiting from subsidised tariffs by artificially keeping their electricity consumption below the prescribed threshold through meter splitting or solar installations. Consequently, a system designed to protect low-income consumers may also be extending benefits to households that do not necessarily require financial assistance.
The government’s proposed digital registration mechanism, introduced through QR codes on electricity bills, seeks to address this challenge. However, the effectiveness of this approach depends on whether ordinary households can actually access and use the registration system. Research by the Pakistan Institute of Development Economics highlights two significant barriers: approximately 45 per cent of protected households do not have access to a smartphone or tablet, while a substantial proportion of those who possess such devices face literacy and language barriers because the registration form is available only in English.
This creates a serious policy contradiction. A mechanism intended to protect vulnerable households could inadvertently exclude precisely those people for whom the subsidy programme was designed. Digitalisation cannot become an alternative form of exclusion. Registration must be accessible, multilingual and supported by offline alternatives for households that cannot independently navigate digital platforms.
More importantly, Pakistan needs to reconsider the very foundation of its electricity subsidy policy. Electricity consumption alone is an imperfect measure of household income and economic vulnerability. A household consuming more than 200 units is not necessarily financially better off than one consuming fewer units. Similarly, a relatively affluent household may qualify for a protected tariff simply by managing its consumption within the prescribed limits.
International experiences offer useful lessons. Indonesia, South Africa, the Philippines and other countries have adopted different approaches to identifying eligible households through income records, social registries, identity databases and consumption patterns. Pakistan cannot simply replicate any of these models, but it can adapt their underlying principles to its institutional and administrative realities.
The World Bank’s recommendations, as discussed in the programme, point towards a more comprehensive approach: expanding registration access, introducing alternative registration channels, allowing corrections to household records, moving beyond consumption-based eligibility and integrating electricity consumption data with national identity and household income information.
Ultimately, electricity subsidies should be treated as a social protection instrument rather than an indiscriminate tariff concession. Their purpose should be to protect economically vulnerable households, not to reward consumption patterns or provide universal relief irrespective of financial circumstances.
The challenge for Pakistan is not simply to reduce the subsidy bill. It is to design a transparent, accessible and evidence-based system that identifies deserving households without excluding those who genuinely need support. A successful reform must balance fiscal sustainability with social justice. Otherwise, subsidy rationalisation may become another exercise in administrative restructuring that places the burden of reform on the very households the state is supposed to protect.
The writer is the researcher at the Republic Policy
