Govt Plans Major Cut in Solar Net Metering Rates. IMF Raises Concerns

The government has submitted a proposal to the International Monetary Fund (IMF) to revise electricity tariffs for solar panel users utilizing net metering. According to The News, the plan suggests purchasing excess electricity generated by solar consumers at a drastically reduced rate, cutting it from Rs27 per unit to approximately Rs10 per unit.

The IMF has expressed concerns over how the government plans to manage off-grid solar panel owners, as their rapid growth could disrupt power sector efficiency in the long run. Although no definitive decision has been made, the global lender has urged Pakistan to address these emerging challenges.

Additionally, the government is working on a broader strategy to adjust electricity tariffs. Out of the 104 power plants operating in the country, 18 belong to the state, while 86 are independent power producers (IPPs). To enhance efficiency, the government has already shut down five underperforming plants, renegotiated tariffs with 14 IPPs, and secured cost reductions for eight bagasse-based power plants.

Negotiations with the remaining IPPs are still underway, with expectations of further cost reductions. Furthermore, the government is evaluating the potential use of the Rs1.3 trillion fiscal cushion—created by lower debt servicing obligations—to reduce baseline electricity tariffs. These initiatives are part of a comprehensive power sector overhaul aimed at addressing IMF concerns while ensuring sustainable energy pricing.