The federal cabinet of Pakistan, chaired by Prime Minister Shahbaz Sharif, has postponed the approval of the solar net metering policy in a recent meeting. Sources indicated that the Prime Minister has directed the Power Division to conduct a review of the policy before moving forward.
Key Developments:
- Solar Net Metering Policy:
- The proposed amendments aimed to reduce the buyback tariff for solar energy producers from Rs. 27 per unit to a range of Rs. 8-9 per unit. The federal government justified this adjustment by stating that the current rates were exerting pressure on consumers connected to the grid, necessitating a more equitable cost-sharing approach among electricity users.
- The decision to defer the policy approval aims to allow for broader stakeholder consultations to gather input and finalize the recommendations.
- International Monetary Fund (IMF) Agreement:
- During the cabinet meeting, Prime Minister Sharif lauded the successful completion of a staff-level agreement with the IMF, which is part of a $7 billion Extended Fund Facility. As a result, the IMF has approved an additional $1.3 billion to support Pakistan’s climate change initiatives.
- The Prime Minister highlighted the IMF’s recognition of macroeconomic stability and declining inflation, which is currently at its lowest level since 2015. He attributed the successful negotiations to the efforts of Finance Minister Muhammad Aurangzeb and his economic team.
- Electricity Pricing and Other Approvals:
- The cabinet also approved a reduction in electricity prices, citing savings from decreased petroleum prices.
- Agreements with bagasse-fired power plants under revised terms were sanctioned, alongside the in-principle approval for the Whistleblower Protection and Vigilance Commission Act, 2025, which aims to promote transparency and accountability.
- Tax Amendments:
- The cabinet sanctioned amendments to tax regulations within the Islamabad Capital Territory as part of the Resource Mobilization and Utilization Reform Program, following earlier reforms in 2023 and 2024.
- Additionally, the Income Tax (Second Amendment) Bill, 2025, was approved to reinstate tax rebates for full-time teachers and researchers.
- Focus on Economic Policies:
- Prime Minister Shehbaz Sharif reiterated that the government’s economic policies are designed for long-term stability and sustainable growth, emphasizing the need for national unity in the pursuit of prosperity.
In summary, while the cabinet’s postponement of the solar net metering policy underscores the need for further inputs from stakeholders, significant advancements were made in other areas, including electricity pricing, tax reforms, and efforts to enhance economic stability in collaboration with the IMF.
