Latest news with #IGCEP2025
Business Recorder
14-05-2025
- Business
- Business Recorder
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
Business Recorder
14-05-2025
- Business
- Business Recorder
Amendments to net-metering rules: PD 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
Business Recorder
09-05-2025
- Business
- Business Recorder
Reform or rhetoric?
EDITORIAL: That it took this long to inject merit and transparency into Pakistan's power sector is itself an indictment of decades of mismanagement. Still, Prime Minister Shehbaz Sharif's approval of the revised Indicative Generation Capacity Expansion Plan (IGCEP 2025–35) is a welcome departure from the rent-seeking, politically motivated decision-making that has long defined electricity planning in the country. By scrapping 7,967 megawatts of high-cost projects and rescheduling others, the government claims savings of USD 17 billion — a figure that underscores just how much waste was built into the old model. For years, the power sector has operated as a parallel economy — driven less by national interest and more by vested ones. The plan's pivot away from expensive, imported fuels and towards domestic and renewable sources is both logical and long overdue. It should never have required a crisis to realise that relying on costly generation while locking the state into capacity payments and sovereign guarantees was unsustainable. Yet that is precisely the legacy this reform effort must now overcome. On paper, the changes are sound. By cutting the original 14,984MW generation expansion target in half, and prioritising 7,987MW of projects based on local resources — hydro, wind, solar, and nuclear — the IGCEP marks a clear shift toward affordability, efficiency, and long-term sustainability. The commitment to ending the single-buyer model, eliminating capacity charges, and opening the door to competitive bidding are all necessary steps toward a functioning electricity market. But these steps should have been taken a decade ago. For too long, power projects were awarded on a cost-plus basis with little regard for actual need or affordability, producing a glut of idle capacity and rising tariffs for consumers. That culture of inefficiency and impunity was not a design flaw — it was the system. One can only hope that this latest attempt at reform does more than tinker at the margins. Also worth noting is the exclusion of K-Electric's renewable energy proposals from the IGCEP. While officials have justified the move by pointing to available alternatives like Thar coal and nuclear power near KE's system, it remains to be seen whether this exclusion will serve consumer interests in Karachi or simply reinforce old fault lines between the utility and federal planners. KE's instruction to set up its own time-line to access the National Grid might make technical sense, but it also reflects a persistent inability to integrate planning across jurisdictions. That the plan was revised only after a groundswell of concern — triggered by falling demand, surging net metering, and a growing stockpile of underutilised capacity — should serve as a cautionary tale. Officials now admit that previous iterations of the IGCEP were laden with projects that lacked even basic financial progress or construction benchmarks. That nearly 15,000MW of such 'committed' capacity has now been either cut or rescheduled only confirms how deeply flawed the planning process was. This is where the government's real test lies. Replacing megawatts is easy; replacing the culture that enabled poor planning and contractual exploitation is not. Corruption, inefficiency, and bureaucratic inertia continue to grease palms all the way to the top. If these reforms are to yield lasting benefits, they must be accompanied by structural discipline — regulatory clarity, professional independence, and a willingness to prosecute those who looted the sector under previous regimes. In the end, consumers want affordable, reliable power. Producers want clear rules and predictable returns. And the country needs a power sector that supports, not stifles, economic growth. The IGCEP 2025–35 offers a framework to move in that direction. Better late than never, so to speak. But if the same old habits resurface under a new cover, we may not get another chance to fix what's broken. Copyright Business Recorder, 2025
