Govt Proposes Drastic Cut in Solar Net Metering Rate

The government has presented a plan to the International Monetary Fund (IMF) delegation to revise electricity tariffs for net metering of solar panel owners. Under the proposed changes, the government intends to purchase surplus electricity generated by solar panel owners at a significantly reduced rate compared to the current tariff, reported a national daily. At present, surplus electricity is purchased at Rs. 27 per unit. However, the new proposal suggests lowering this rate to approximately Rs. 10 per unit. The IMF, while reviewing the plan, raised concerns about how the government plans to address the issue of solar panel owners who remain off the national grid. Although the government has yet to provide a definitive response, the IMF has highlighted the rapid growth in solar installations across the country. This trend, according to the IMF, could accelerate in the coming months and years, potentially posing challenges to the efficiency and sustainability of the power sector. The government has emphasized the importance of rationalizing electricity tariffs. Officials revealed that there are currently 104 power plants operating nationwide, including 18 government-owned facilities and 86 run by independent power producers (IPPs). As part of its efforts to improve efficiency, the government has already decommissioned five underperforming power plants and renegotiated tariffs with 14 IPPs. Additionally, tariff reductions have been secured for eight bagasse-based IPPs. Negotiations with the remaining IPPs are ongoing, according to officials. The government is also exploring the possibility of utilizing fiscal space created by a reduced debt servicing burden, which amounts to Rs. 1.3 trillion. These measures, officials say, are expected to help lower the baseline electricity tariff.