Federal Minister for Energy Awais Khan Leghari has said that the government is set to reduce electricity tariffs following a Rs1.4 trillion saving in independent power producer (IPP) contracts. He stated that this cost reduction would translate into an annual saving of Rs400 billion, which will be reflected in the upcoming tariff cut to be announced by Prime Minister Shehbaz Sharif.
Speaking in a television talk show, Leghari said that in addition to IPP contract revisions, the lowering of the discount rate to 12% on power sector loans would also contribute to the reduced electricity costs.
Addressing concerns over the new solar policy approved by the Economic Coordination Committee (ECC), Leghari clarified that there would be no taxes on electricity generated and exported to the grid by rooftop solar panel users. However, like all other consumers, they would be required to pay an 18% tax on electricity imported from the grid.
He dismissed claims that solar consumers would effectively sell electricity at Rs8.88 per unit instead of Rs10 per unit due to the tax, reaffirming that the buyback rate under the new policy would remain Rs10 per unit.
The minister further explained that under the revised policy, rooftop solar panel users who consume 25% of their own solar electricity and rely on the grid for the remaining 75% would recover their investment in 3.5 to 4 years at a 15% plant factor.
In contrast, those under the older net metering policy will continue selling electricity at Rs27 per unit during their remaining contract period, allowing them to recover investments in as little as 18 months.
Leghari highlighted that over the past 18 months, rooftop solar panel installations have added between 1,500 to 2,000 megawatts to the national grid, with a projected annual increase of 1,000 to 1,100 MW.
He noted that the number of rooftop solar users has reached 283,000, which has placed an additional burden of Rs150 billion on conventional grid electricity consumers, causing a Rs1.5 per unit increase in their tariffs.
To balance the impact, the government has introduced a net billing system with a buyback rate of Rs10 per unit for a five-year contract period, he added.
Leghari expressed optimism that industrial electricity demand would rise following the anticipated tariff reduction, boosting overall consumption. He also revealed that the government had scrapped plans for 10,000 MW of power projects for which letters of intent (LoIs) had been issued, as their production costs were deemed too high.
