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Business Recorder
a day ago
- Business
- Business Recorder
Budget 2025-26: Pakistan govt proposes 18% tax on imported solar panels
Pakistan government on Tuesday proposed the budget for the financial year 2025-26, revealing its intention to impose 18% sales tax on imported solar panels. The proposed tax would help the local industry grow, Finance Minister Muhammad Aurangzeb said in his budget speech in the National Assembly. The development comes amid a solar boom in the country, with net-metering capacity in Pakistan jumping to 2,813 megawatts (MW) as of March 31, 2025, according to the Pakistan Economic Survey 2024-25 released on Monday. Key highlights of Pakistan Economic Survey 2024-25 The net-metering capacity rose by over 300MW from the previous fiscal year, when the capacity stood at around 2,500MW, as per NEPRA's State of the Industry Report 2024. The 300MW jump in net-metering capacity was largely attributed to a sharp fall in solar panel prices and the financial incentives net-metering offers to consumers. However, with 18% tax proposed in the budget for FY26, the prices for solar panels may increase. Despite being a low-income country plagued by economic and social issues, a green revolution is taking place in Pakistan and the South Asian country has quietly emerged as one of the world's largest markets for the growing solar industry. According to the Global Electricity Review 2025 by Ember, an energy think tank in the UK, Pakistan imported 17 giga-watts (GW) of solar panels in 2024, joining the ranks of leading solar nations. 'Solar is now so cheap that large markets can emerge in the space of a single year - as evidenced in Pakistan in 2024,' read the report published earlier this year. 'Amid high electricity prices linked to expensive contracts with privately-owned thermal power stations, rooftop solar installations in Pakistan's homes and businesses soared as a means of accessing lower-cost power.' A recent research report stated that China exported more solar panels to Pakistan than to many G20 nations, with over 16 gigawatts (GW) imported in 2024 alone. The report titled 'Leader of One or Leader of None - China's Choice for Clean over Coal in Pakistan' published by think tank Renewables First said more than 39GW of solar panels, nearly all from China, entered Pakistan in the last five years. Solar panels: Pakistan govt mulling withdrawing ST exemption These solar panels are 'enough to exceed three-quarters of Pakistan's installed national generation capacity', the report said. 'Pakistan may be the first to experience this clash between legacy coal and democratised solar at this scale, but it will not be the last. If China gets this right, it will not just lead to Pakistan's energy transition. It will prove itself as the architect of a new Global South energy paradigm, one that is fast, fair, and truly transformative,' the report envisaged.


Business Recorder
2 days ago
- Business
- Business Recorder
Solar net-metering capacity in Pakistan jumps to 2,813MW
Solar net-metering capacity in Pakistan has jumped to 2,813 megawatts (MW) as of March 31, 2025, according to the Pakistan Economic Survey 2024-25, reflecting a 12% increase over the first nine months of the current fiscal year. This represents a rise of over 300MW from the previous fiscal year, when the capacity stood at around 2,500MW, as per NEPRA's State of the Industry Report 2024. The 300MW jump in net-metering capacity is largely attributed to a sharp fall in solar panel prices and the financial incentives net-metering offers to consumers. China exports more solar panels to Pakistan than to many G20 nations in 5 years: report The system allows consumers to install rooftop solar panels, sell surplus power generated during the day to distribution companies (DISCOs), and purchase electricity at night — offsetting monthly bills and contributing to the national grid. Experts say the expansion has also improved voltage stability and reduced transmission and distribution losses, showcasing tangible benefits to the power system. Despite the growth, net-metering still accounts for a fraction of the total potential. Pakistan is estimated to have imported solar equipment capable of producing 20,000–22,000MW in recent years, most of which is installed off-grid — particularly in agriculture, residential, and industrial settings. The surge in clean energy coincides with broader developments in the country's power sector. As of March 2025, Pakistan's total installed electricity generation capacity reached 46,605MW, up 1.6% from 45,888MW a year earlier. This includes the operationalisation of the 884MW Suki Kinari Hydropower Project, and progress on new solar, wind, and bagasse-based projects, as well as the termination of power purchase agreements (PPAs) with some independent power producers (IPPs). Of the total capacity, 44.3% now comes from hydel, nuclear, and renewable sources, marking a continued shift away from thermal power, which now accounts for 55.7% of the energy mix. Renewable energy data reveals that hydel sources contribute 24.4%, nuclear power 7.8%, and solar and wind (including net-metering) 12.2% to the installed capacity. Meanwhile, Khalid Waleed, an energy expert at the Sustainable Development Policy Institute (SDPI), warned against proposed tariff reductions for net-metering. From crisis to clean energy: Pakistan emerges as top solar market in 2024 The government is considering slashing the current Rs27 per unit buyback rate to Rs10, which Waleed argued would 'disincentivise clean energy' and reverse recent gains. Instead, he recommended a phased reduction to Rs15-18 per unit to maintain investor and consumer interest. The Indicative Generation Capacity Expansion Plan (IGCEP) 2022-31 set a target to add 3,420MW under net-metering by 2031. NEPRA believes this goal can be met — or even exceeded — if distribution companies avoid obstructing the ongoing rooftop solarisation momentum.