Net-metering, tax controversies cloud future of solarization in Pakistan despite government clarification

In this file photo, taken on March 10, 2012, a Pakistani company employee arranges a solar panel during a marketing demonstration in a park in Islamabad. (AFP/File)
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Updated 20 May 2024
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Net-metering, tax controversies cloud future of solarization in Pakistan despite government clarification

  • Government says it won’t end net-metering policy for solar power producers, promises to honor commitments made by companies
  • Pakistan’s energy woes stem from high capacity charges consumers pay due to long-term government contracts with power producers

KARACHI: Controversies about net-metering and imposition of a new tax have cast a cloud over Pakistan’s transition to solar energy despite the government’s ambitious plans, stakeholders said on Monday, adding the situation has left them in a state of uncertainty.

Pakistan approved the net-metering policy in 2017 that allows consumers to sell excess electricity produced by their solar systems to power distribution companies, resulting in significant savings in their monthly bills.

However, the energy ministry stirred a controversy last month by declaring that net-metering was promoting “unhealthy investments” in installation of solar power by affluent domestic and industrial consumers, hinting at cutting the buyback rates.

“Before this [controversy], people were shifting to solar [energy] in such a way that we thought that 100 percent Pakistan embraced solar energy,” Zulfiqar Ali, an importer, supplier and installer of solar panels, told Arab News on Monday.

“Now, we’re witnessing a stark contrast, a slowdown in inquiries, stagnation in projects, all amidst a talk of governmental reconsideration of solar energy policies.”

Ali said the net-metering issue had a lot of effect on the market as the purchasing groups suddenly went silent and the deals that were going on became stagnant. “The planned projects have gone into an idle position, people are neither saying yes nor no,” he added.

Recent reports published by local media about new taxes and an end to net-metering policy further compounded the situation and prompted Energy Minister Awais Leghari to explain the government’s position on the matter. 

“We completely reject these stories. The agreements our companies have made with net-metering users, whether they are for five years, six years, or seven years, will not be altered in any way and the government will not damage its reputation, nor will it cause any inconvenience to those investors,” Leghari said at a press conference in Lahore on Sunday.

He said the government was fully committed to renewable energy and solarization and was in favor of continuing the net-metering policy. 

“If, after studying it over the next few months, there is a need to revise it, it will be done very responsibly and in consultation with stakeholders,” Leghari said.

“After the approval of the entire government, if necessary, we will rationalize this. At this moment, we are committed to fulfilling all the contracts we have signed with various people. We will uphold the integrity of the entire government and move forward together.”

But despite the government’s assurances, an atmosphere of uncertainty prevails in the South Asian country with regard to solarization.

“I wanted to install solar panels at my rooftop to mitigate the impact of high electricity bills but now I am unable to take a decision because of the government’s intended moves of either taxing panels or curtailing net-metering benefits,” said Khalid Abbas, a resident of Karachi, adding that he would wait for clarity on the subject.

Solar panel suppliers said people, who were buying solar panels by selling their cars or jewelry, had stopped purchasing the equipment. 

“Residential consumers who wanted to install 5-20KW panels have stopped and are waiting for clarity,” Zulfiqar said.

Pakistan’s energy woes stem from the substantially high electricity bills, mainly due to the capacity charges that are as high as 65 percent and the nation is bound to pay these to power producers, even though their plants stand idle. 

The power purchase price (PPP), or the average per unit price based on the generation cost, is Rs20.60, which includes Rs14.09 capacity charges, and Rs6.21 fuel and variable charges, according to Pakistan’s reference tariff for fiscal year 2023-2024.

Pakistani energy experts believe the volume with which solar energy is increasing is still “insignificant” and does not even make 1 percent of the total power generation in the country.

“But the way it is going on in Pakistan, perhaps a significant portion of our net-metering will be done from it,” Dr. Khalid Waleed, an expert on energy economics, told Arab News. “Around 2,000MWs will be coming from net-metering. So, it should not be discouraged at all.”

When consumers switch to solar power, Waleed said, capacity charges are borne by other consumers that ultimately increases their power burden. 

Experts say the country won’t be able to get rid of the capacity charges before 2050 due to long-term contracts made with power producers.


Pakistan calls for advance food imports before Ramadan to ease pressure on ports

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Pakistan calls for advance food imports before Ramadan to ease pressure on ports

  • Ensuring food security during Ramadan a national responsibility, says maritime affairs minister
  • The Islamic month of Ramadan is expected to start in Pakistan after mid-February

KARACHI: Pakistan’s Maritime Affairs Minister Junaid Anwar Chaudhary on Sunday urged importers to import food items in advance and avoid last-minute delays to ease pressure on ports as Ramadan approaches. 

Muslims around the world fast during the holy month of Ramadan from dawn till sunset. They break the iftar meal with various food items such as fruits, dates and fried items. Thousands of people shop daily during Ramadan for iftar meals in markets across the country. 

In a message released to food importers, Chaudhry noted that the demand for edible oil and essential food items rises during the month of Ramadan. 

“Import strategies should be planned in a timely manner to reduce pressure on ports,” Chaudhry said. “Pakistani ports operate on a first-come, first-served basis.”

Chaudhry said delays in berthing of vessels and cargo lead to congestion at ports. He called on importers to share their import schedules in advance so that the port system could operate more efficiently. 

He said the timely supply of food items was possible through coordination between the public and private sectors. 

“Ensuring food security during Ramadan is a national responsibility,” the minister said. “Advance import of food commodities ahead of Ramadan is essential.”

A central moon sighting committee in Pakistan, the Ruet-e-Hilal Committee, determines when Ramadan begins. 

The Islamic month is expected to start this year after mid-February, around Feb. 17 or Feb. 18.