Federal Minister for Power Division, Sardar Awais Ahmad Khan Leghari, has announced that the government is preparing to submit a proposal for a new solar panel policy to the Economic Coordination Committee (ECC) for approval. This policy aims to promote the use of solar energy across Pakistan by introducing a structured mechanism for purchasing electricity generated from rooftop solar panels.
New Tariff Solar Panels
Under the proposed policy, the national grid will purchase electricity from newly installed rooftop solar panels at a rate of Rs. 9.50 to Rs. 10 per unit. This initiative is expected to encourage both residential and commercial consumers to invest in solar energy, as they will be able to recover their initial investment within four to five years. The minister emphasized that this measure aligns with the government’s commitment to promoting renewable energy, reducing reliance on expensive fossil fuels, and providing relief to electricity consumers struggling with high power costs.
Solar Panel Agreements
Speaking on Geo News’ program, Leghari reassured the public that the government remains committed to honoring existing contracts with consumers who had previously installed rooftop solar panels. Under these agreements, electricity is being supplied to the national grid at a higher rate of Rs. 27 per unit. However, he warned that if the current net metering system is not revised, it could lead to a significant financial burden on consumers. He explained that without policy adjustments, the cost of net metering could rise by Rs. 600 billion annually, causing an increase in electricity tariffs by Rs. 5 to Rs. 6 per unit.
Circular Debt and Financial Challenges
Addressing the country’s growing circular debt, the minister stated that it had increased by Rs. 1,580 billion during the previous PTI government. However, he noted that corrective measures taken by the last PDM government and the current administration have helped stabilize the situation. While circular debt grew by Rs. 80 billion in the previous year, Leghari expressed confidence that improved management of distribution companies (DISCOs) and savings from reduced discount rates would help decrease it in the coming years.
Breakdown of Circular Debt
Providing details about the Rs. 2,400 billion circular debt, Leghari explained that a portion of this amount is owed to government-owned power plants, which do not accrue interest. He also revealed that the government has successfully renegotiated contracts with independent power producers (IPPs), waiving late payment surcharges amounting to Rs. 460 billion. Further financial relief is expected as more IPP contracts are revised, potentially easing the burden on the power sector and consumers.
Government’s Strategy to Reduce Circular Debt
To tackle circular debt, the government is in talks with commercial banks to secure a loan of Rs. 1,200 billion. This loan will be repaid over a period of five to six years using the existing surcharge of Rs. 2.83 per unit on electricity bills, ensuring that consumers do not face additional financial burdens.
IMF’s Confidence in Power Sector Reforms
The minister also disclosed that the government has already secured relief of Rs. 3.50 per unit through revised IPP contracts, with further reductions expected as negotiations with additional IPPs continue. He reassured that the International Monetary Fund (IMF) has not raised any objections to the proposed tax cuts on electricity and has shown confidence in the government’s commitment to power sector reforms. These measures are part of a broader strategy to ensure long-term energy sustainability, financial stability, and affordability for consumers across Pakistan.
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