Welfare Analysis of Electricity Subsidies in Pakistan 

Pakistan has witnessed acute energy shortage over the past few years. One of the most important reasons for such routinized power outages is the competing use for resources. Moreover, energy mix for electricity generation and consequent circular debt issues are also aggravating the situation. The government of Pakistan has paid more than one trillion rupees as Tariff Differential Subsidy (TDS) to safeguard the masses against the increasing electricity generation cost. However, TDS, being an untargeted subsidy, is not only piling financial burdens but also resulting in welfare loss.