PM directs Power Division to review proposed reduction in net metering buyback rates

Prime Minister Shehbaz Sharif has instructed the Power Division to promptly review and verify the proposed reduction in net metering buyback rates, following delays in approving the summary on the matter, Business Recorder reported, citing sources within the National Electric Power Regulatory Authority (Nepra).   

The directive, issued on October 22, 2025, comes as part of ongoing efforts to address concerns regarding the financial strain imposed on grid-connected consumers.

The new tariff proposal seeks to lower the buyback rate from Rs 22 per unit to Rs 11.30 per unit, citing the additional financial burden on other electricity consumers due to the current scheme.

As part of the review process, the Power Division has been tasked with examining the legal implications of altering buyback rates on existing contracts under the Net Metering Rules of 2015. The review aims to ensure that any proposed changes comply with existing contractual obligations and do not breach legal frameworks.

Further, the Prime Minister has also instructed the Power Division to develop new standard contracts aligned with a proposed Net Billing framework for future consumers, to create a more sustainable and balanced system.

The issue of net metering has been contentious, with rising capacity payments (CPP) and reduced energy sales contributing to tariff hikes for grid-connected customers. The Economic Coordination Committee (ECC) had previously approved a Rs 10 per unit buyback rate earlier this year, but the proposal was shelved following objections from cabinet members.

As part of the review, the Power Division has been asked to assess the broader impact of net metering expansion, which is projected to lead to significant sales reductions and higher costs for non-net metering consumers. 

Internal assessments show a loss of 3.2 billion kWh in FY2024, resulting in an additional burden of Rs 101 billion and an average tariff increase of Rs 0.9 per kWh for grid customers. This burden is expected to increase substantially by FY2034, with sales reductions of 18.8 billion kWh leading to an additional Rs 545 billion cost and an average tariff hike of Rs 3.6 per kWh.

The Ministry of Information and Broadcasting has been tasked with developing a communication strategy to present the government’s position on the reforms and proposed tariff adjustments in an upcoming high-level meeting.