THE government’s commitment to the IMF to scrap untargeted residential electricity subsidies from next year and replace them with a targeted support mechanism through the Benazir Income Support Programme is politically fraught but economically difficult to avoid any longer. It is also important to end untargeted subsidies because high tariffs have created powerful incentives for consumers to indulge in ‘legal power theft’ by manipulating the system. Households that can afford to do so instal multiple electricity meters, splitting their consumption across connections to remain below the subsidised 200-unit threshold. What was originally designed as relief for lower-middle-income families has evolved into a pricing distortion that rewards gaming the system. The agreement........

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