Amendments to net-metering rules: Power Div. set to resubmit its proposal to ECC

ISLAMABAD: The Power Division is all set to resubmit its proposal to the Economic Coordination Committee (ECC) regarding amendments to the Net-Metering Regulations, aimed at substantially reducing buyback rates as, according to well-informed sources, the Cabinet Division has given the greenlight for resubmission.

In a letter to the Power Division, the Cabinet Division stated that while the ECC had approved the proposed amendments in its meeting held on March 13, 2025, the Federal Cabinet had deferred ratification of the decision. The case was deferred after the Cabinet considered an additional agenda item submitted by the Power Division, with instructions to conduct broader consultations with stakeholders before resubmission.

The Cabinet had previously postponed ratification due to strong public and parliamentary opposition. However, with a shift in the ground realities, the Cabinet Division has now advised the Power Division to resubmit the summary for the ECC’s reconsideration. Under the earlier proposal, the government aimed to limit the validity period of net-metering contracts to five years, with a gradual reduction in buyback rates from Rs 27 to Rs 10 per unit.

Net metering consumers: Contract term limited to 5 years

On March 23, 2024, Prime Minister Shehbaz Sharif chaired a meeting on net-metering and directed the Power Division to address public confusion surrounding the policy.

According to the Power Division, the current net-metering regime allows consumers to bypass fixed charges. Combined with rising capacity payment pressure (CPP), falling energy sales, and declining recovery of fixed charges, this has contributed to rising electricity tariffs. Net-metering capacity led to a reduction in sales of approximately 3.2 billion kWh in FY 2024, creating an estimated financial burden of Rs 101 billion, and resulting in an average tariff increase of around Rs 0.9/kWh for other consumers.

Looking ahead, the impact is expected to worsen. By FY34, projected net-metering sales reductions could reach 18.8 billion kWh, imposing an additional burden of approximately Rs 545 billion—translating into an average tariff increase of Rs 3.6/kWh. Moreover, the proposed IGCEP 2025 includes over 8,000 MW of net-metering additions through FY 2034, classified as “forced additions,” which may undermine the principle of least-cost power generation expansion. Meanwhile, the Power Division has approached the World Bank for technical assistance for a nationwide rooftop solar assessment, through the Economic Affairs Division (EAD).

In response, the World Bank appreciated the Power Division’s proactive steps. Eva Liselotte Lescrauwaet, Acting Operations Manager for Pakistan, confirmed in a letter to the EAD Secretary that the Bank will support the initiative through its Energy Sector Management Assis-tance Program (ESMAP).

“The assessment aligns closely with our ongoing engagement with the Power Division under the broader energy sector reform agenda,” she wrote, as “it will complement the Electricity Distribution and Efficiency Improvement Project (EDEIP), especially its focus on strengthening the distribution sector and informing policy development.”

The proposed work will aim to: (i) map and analyze the current deployment of rooftop solar PV systems across Pakistan; (ii) identify key growth trends and forecast future uptake trajectories; (iii) assess implications for grid integration and system planning; and (iv) provide timely input into the national net metering policy review and related regulatory frameworks.

“We have initiated internal planning to scope this work, including potential collaboration with national institutions and relevant stakeholders. A detailed scope of work concept, delivery timeline and requested data to be provided by the government will be shared with the Power Division and Ministry of Economic Affairs for review and concurrence,” she said adding that the Bank is committed to supporting the GoP’s efforts to foster sustainable, equitable and resilient sector development.

Copyright Business Recorder, 2025