Pakistan Government Proposes Solar Net Metering Tariff Reduction to IMF

Islamabad:The government of Pakistan has shared a new proposal with the International Monetary Fund (IMF) regarding the net metering tariff for solar energy. The plan suggests reducing the tariff at which excess electricity generated from residential solar panel installations is purchased, aiming to make it more affordable for consumers.

Under the proposal, the government plans to lower the current purchase rate of 27 rupees per unit for excess solar energy to approximately 10 rupees per unit. This move is expected to encourage more households to adopt solar power, contributing to the country’s renewable energy efforts.

However, the IMF raised concerns about how the government would address the issue of individuals who prefer to remain off-grid despite having solar panels installed on their roofs. The government has yet to provide a conclusive response, but the IMF has expressed concerns, as reports indicate a rapid increase in solar energy installations, which could lead to challenges in the overall performance of the electricity sector.

Additionally, the government informed the IMF that electricity rates need to be rationalized, as the country currently operates 104 power plants, of which 18 are government-owned and 86 are Independent Power Producers (IPPs). The government has already shut down five ineffective plants and signed agreements to lower electricity prices with 14 IPPs.

Moreover, the government has reduced rates with 8 bagasse (sugarcane residue) based IPPs and is currently negotiating with remaining IPPs to further lower rates.

Another proposal under consideration involves utilizing the financial savings from reducing the country’s debt burden, which has resulted in a reduction of 1.3 trillion rupees, to further lower electricity tariffs. However, despite a slower growth in the circular debt, which currently stands at 2.42 trillion rupees, it remains a significant challenge for the sustainability of the energy sector.