The Pakistani government has submitted a proposal to the International Monetary Fund (IMF) to revise electricity tariffs for net metering, significantly reducing the rate at which surplus solar energy is purchased from solar panel owners.
Government’s Proposed Tariff Reduction
Currently, the government buys excess electricity from solar net metering consumers at Rs. 27 per unit. However, under the new proposal, this rate may be slashed to Rs. 10 per unit, a substantial reduction aimed at restructuring the country’s power sector.
A national daily reported that the IMF delegation, while reviewing the proposal, raised concerns about the increasing number of solar panel owners who operate independently, without relying on the national grid.
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Rising Solar Adoption and IMF’s Concerns
The IMF has acknowledged the rapid expansion of solar energy adoption in Pakistan, warning that the trend could continue to accelerate in the coming months and years. This surge in private solar installations poses potential challenges to the efficiency and sustainability of the national power sector.
Although the government has not yet provided a definitive response to these concerns, officials maintain that tariff rationalization is necessary to ensure the stability of the energy sector.
Power Sector Reforms and Efficiency Measures
Pakistan currently operates 104 power plants, with 18 government-owned facilities and 86 run by independent power producers (IPPs). To improve efficiency and reduce power costs, the government has:
- Decommissioned five underperforming power plants
- Renegotiated tariffs with 14 IPPs
- Secured tariff reductions for eight bagasse-based IPPs
Additionally, negotiations with other IPPs are ongoing to further optimize the cost structure.
Fiscal Adjustments to Ease Electricity Costs
Officials also highlighted that Pakistan’s reduced debt servicing burden—amounting to Rs. 1.3 trillion—has created some fiscal space. The government is exploring ways to leverage these savings to lower the baseline electricity tariff, making power more affordable for consumers.
What’s Next?
As Pakistan moves forward with energy sector reforms, the proposed reduction in solar net metering tariffs is expected to impact thousands of solar panel owners. With growing IMF scrutiny and ongoing negotiations, the final decision could significantly influence the country’s renewable energy landscape.
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