The Pakistani government has sent a proposal to the International Monetary Fund (IMF) seeking approval for a significant reduction in electricity tariffs for net metering, potentially cutting the purchase rate for surplus solar energy by over 60%.

Government Plans Major Reduction in Solar Buyback Rates

Currently, the government purchases excess electricity from solar net metering consumers at Rs. 27 per unit. The new proposal would reduce this rate to Rs. 10 per unit, representing a dramatic shift in Pakistan’s renewable energy policy.

According to a national daily report, the IMF delegation reviewing the proposal expressed concern about the growing number of solar panel owners operating independently from the national grid.

IMF Recognizes Rapid Solar Growth Trend

The IMF has noted the quick expansion of solar energy adoption across Pakistan and warned this trend could accelerate further in coming months and years. This growth in private solar installations may create challenges for the national power sector’s efficiency and sustainability.

Government officials maintain that tariff adjustments are necessary for energy sector stability, though they haven’t provided a definitive response to the IMF’s concerns.

Power Sector Reform Efforts

Pakistan currently operates 104 power plants – 18 government-owned and 86 run by independent power producers (IPPs). To improve efficiency and reduce costs, the government has:

  • Shut down five underperforming power plants
  • Renegotiated tariffs with 14 IPPs
  • Secured tariff reductions for eight bagasse-based IPPs

Negotiations with other IPPs continue as part of the optimization efforts.

Financial Space Created by Reduced Debt Burden

Officials highlighted that Pakistan’s reduced debt servicing burden of Rs. 1.3 trillion has created some fiscal flexibility. The government is considering using these savings to lower baseline electricity tariffs for consumers.

Impact on Renewable Energy Future

The proposed reduction in solar net metering tariffs will affect thousands of solar panel owners across Pakistan. The final decision, influenced by IMF scrutiny and ongoing negotiations, could significantly shape the country’s renewable energy landscape going forward.