Govt Announces Good News for Solar Panel Users Selling Electricity to National Grid

Rooftop solar panel users will face no taxation on electricity they generate and export to the national grid, though they will still pay the standard 18 percent tax on power drawn from the grid, Energy Minister Awais Khan Leghari clarified while discussing the new solar policy recently approved by the Economic Coordination Committee. During an interview on Geo News, Leghari also revealed that Prime Minister Shehbaz Sharif will soon announce a significant reduction in electricity rates. The Minister claimed that the government has saved around Rs. 1,400 billion through renegotiated independent power producer (IPP) contracts. “We’ve secured annual savings of Rs. 400 billion, which will directly benefit consumers through lower tariffs,” Leghari explained. “The upcoming tariff reduction will also reflect benefits from lowering the power sector loan discount rate to 12 percent.” The minister dismissed rumors that the new policy would reduce the buyback rate for solar-generated electricity to Rs. 8.88 per unit due to taxation. “The buyback rate remains firmly set at Rs. 10 per unit under the new policy,” he added. Explaining the economics of the revised approach, Leghari noted that consumers with a 15 percent plant factor who use 25 percent solar electricity and 75 percent grid power will recover their investment within 3.5-4 years. This contrasts with existing net metering customers, who will continue receiving Rs. 27 per unit for the duration of their contracts, allowing them to recoup costs in just 18 months. The policy adjustment comes as Pakistan has seen remarkable growth in residential solar adoption. Over the past 18 months, rooftop installations have added between 1,500-2,000 megawatts of capacity, with projections suggesting continued growth of 1,000-1,100 megawatts annually. The solar consumer base has expanded to 283,000 users, creating what Leghari described as a Rs. 150 billion burden on traditional grid customers, who have faced tariff increases of Rs1.5 per unit to subsidize grid storage facilities for net metering users. “This imbalance necessitated our rationalization of the rooftop solar policy, introducing a net billing system with a Rs. 10 per unit buyback rate under five-year contracts,” Leghari explained. Looking ahead, the minister expressed optimism that industrial electricity demand would increase following the prime minister’s forthcoming tariff reduction announcement. He also mentioned that the government had canceled previously committed power projects totaling 10,000 megawatts, despite issued letters of intent, citing excessive costs associated with the proposed electricity generation.