PNN: Despite facing sharp criticism from multiple quarters, Power Minister Awais Leghari on Wednesday announced that the government would not seek a review to reverse recent changes to the solar policy for new consumers, citing an aim to save non-solar consumers from an additional Rs2.87 per unit impact.
The National Electric Power Regulatory Authority (Nepra) on Monday significantly revised the terms of contracts for all existing and future net-metered solar consumers or prosumers in an effort to manage rising solar energy penetration and protect an expensive and inefficient state-owned power network.
However, the Rs2.87 per unit savings for the 39 million non-solar consumers is 391% lower than the financial burden borne by high-consumption households, which subsidise low-consumption users on behalf of the government. According to a Power Division official, the government collects Rs7 to Rs12 per unit from residential consumers using 700 units monthly to fund subsidies for households consuming below 300 units.
Speaking to journalists, Leghari said the government would file a review with Nepra only to maintain the existing net-metering terms for the 466,506 current solar panel owners. “No review will be filed to reverse changes for new solar panel consumers; they can solarise their homes under the new terms,” he said.
The minister added that the policy change affects only 1% of consumers, but could not provide a clear explanation as to why this small group was prioritised over systemic issues such as electricity theft, low recovery rates, high line losses, idle capacity payments, and cross-subsidies.
Leghari’s statement came hours after Prime Minister Shehbaz Sharif instructed the Power Division to appeal to Nepra to review the new regulations, aiming to protect existing contracts for current solar users.
Nepra’s revised policy abolishes netting of sold and purchased units, introducing separate rates for electricity sold and bought by solar panel owners. Under the new terms, solar owners will sell electricity at Rs8.13 per unit but purchase it at rates as high as Rs60 per unit.
A Power Division official noted that these changes will reduce the projected per-unit impact on non-solar consumers from Rs2.87 to Rs2 this year — a nominal benefit of 87 paisa per unit, achieved at the cost of public backlash and reduced government credibility.
Last year, non-solar users paid Rs223 billion (Rs2.44 per unit) due to net-metering, which was projected to rise to Rs2.87 per unit this fiscal year. However, this increase is far smaller than the Rs12 per unit that high-consumption households pay to cross-subsidise low users and the Rs4-5 per unit lost due to theft and system inefficiencies.
The official acknowledged that the government continues to charge Rs7-12 per unit as cross-subsidy while an additional Rs4-5 per unit is lost due to theft and high line losses, highlighting persistent structural issues in the electricity system.
The Express Tribune was the first newspaper that reported on May 19, 2024, that the government had informed the International Monetary Fund about its plan to end the net-metering policy. The Power Minister had then denied the report, which eventually proved correct.
The Power Minister insisted that the cost of theft and inefficiencies was not built into the tariffs and was paid by the Finance Ministry as subsidies. But these subsidies are paid by the taxpayers in the shape of 38.5% income tax on the salaried class. The salaried class last year paid Rs606 billion in income tax.
Leghari insisted that the government was also addressing these issues but argued that tackling the Rs2.44 per unit impact due to solarization was more urgent.
To a question about ending undue burden of up to Rs12 per unit on account of cross subsidy, Leghari said that it had an annual impact of Rs93 billion and the government did not have fiscal space to end the cross subsidy of the residential consumers.
However, the government lost Rs497 billion during the last fiscal year on account of theft and low recoveries, admitted the minister.
Leghari said that 466,506 existing consumers were producing 6,975 megawatts of electricity and applications for another 1,161 megawatts by over 15,000 users were pending for connections.
The government was suddenly exposed to widespread criticism from politicians, former officials, and energy experts, who argue it will disincentive rooftop solar adoption and worsen power sector inefficiencies.
At present, the buyback rate for solar net generation is Rs25.3 per unit, which has been reduced to Rs8.13 per unit. The contract period has been reduced from seven to five years. The burden of capacity payments is being shifted to solar consumers now. The government, in a one go, cut the benefits by Rs17 per unit or 67% for the existing and new solar panel users.
The minister said that out of the total 466,000 consumers, 82% were concentrated in 11 cities. One-fourth of them were in Lahore, 11% in Multan, 9% in Rawalpindi, 7% in Karachi, 6% in Faisalabad, 5% each in Gujranwala, Bahawalpur and Islamabad and 4% in Peshawar.
He disclosed that another 14,000 MW equal solar users were off the grid and the government cannot do anything about them as they are not connected to the national grid.
The minister said that there was mushroom growth in solar penetration in the past three years, as the total installed capacity jumped from 1,085 MW to 6,975 MW by this fiscal year.
The Power Division official also claimed that there would be marginal impact on the owners after the revision in benefits and they would be able to recover their investment within three years and seven months. However, the government’s assumption was faulty, as it claimed that the residential users were selling 60% of their units to the government.
We have to make arrangements at the national grid for the provision of 8,136 MW of electricity during non-solar times and the government made Rs270 billion investment last year to cater for these needs, claimed the power division official.
However, his claim was not substantiated, as the country is already having surplus electricity and the consumers are paying around Rs2 trillion annually in idle capacity payments.
Under Nepra’s direct regulatory and licensing authority, the new rules are applicable to systems with a capacity of one kilowatt to one megawatt.
Instead of addressing the fundamental flaws, the net-billing regime shifts the responsibility of power sector inefficiencies onto compliant solar consumers, said Policy Research Institute of Market Economy (PRIME) — an independent think tank.
Pakistan’s power sector crisis stems from elevated transmission and distribution losses, demand-supply mismatch, delays in tariff adjustments, and persistent governance issues.
Pakistan has committed to sourcing 60% of its energy mix from renewables by 2030 and to reducing emissions under its updated NDCs by 2030, said Awais Leghari. He said that the government has already increased the share of clean energy to 55%, bringing the end-goal within reach.
Rooftop solar has been one of Pakistan’s market-driven successes in expanding renewable energy, said PRIME. By dismantling net metering without a credible transition framework, the new regime risks pushing compliant solar users toward off-grid systems and weakening alignment with global energy transition trends that actively incentivize distributed generation, PRIME added.