ISLAMABAD: Prime Minister Shehbaz Sharif has reportedly instructed the National Electric Power Regulatory Authority (NEPRA) and the Power Division to revise net metering regulations for the rationalization of buyback rates, according to sources familiar with the matter.
The surge in net metering installations has raised concerns for the Power Division and Distribution Companies (Discos), as their revenues have been declining. The issue of significant solarization has been brought up with various international financial institutions including the World Bank, Asian Development Bank (ADB), and now the International Monetary Fund (IMF), which emphasizes the need for full cost recovery of electricity from consumers.
In a recent aide-memoire, the ADB acknowledged the concerns expressed by the Power Division regarding the increasing number of net metering projects and their potential impact on Discos. Although the ADB’s proposed program primarily focuses on off-grid areas, it plans to consult with the Power Division as the program preparation progresses.
The Power Division presented its case of extensive net metering to the Prime Minister, highlighting its financial implications on Discos’ revenues, which are already below target. It proposed revising the buyback rates to around Rs 11 or 12 per unit, significantly lower than the current rate of Rs 21 or Rs 22 per unit.
During the meeting, it was decided that the Power Division would submit a summary after refining the elements of rationalization, including the conversion of the existing net metering regime to gross billing, creation of a separate tariff category, revision of buyback rates, amendment of net metering regulations, and the formulation of a dynamic formula to determine a reasonable payback period.
Following discussions, the Prime Minister directed the Power Division and NEPRA to approve amendments to the net metering regulations. The Power Division will lead this effort to finalize recommendations by May 31, 2024. The Power Division highlighted in its presentation to the Prime Minister that solar panels worth 6,000 MW have been imported during the first nine months of the current fiscal year, largely due to the availability of cheap Chinese PV panels.
Furthermore, the Sindh Energy Department has sought ADB support for mini-grid solutions in rural underserved areas, a new solarization initiative for remote and underprivileged regions of Sindh, and solarization of reconstructed houses in flood-affected areas. The ADB views these requests as aligned with the objectives of the Second Access to Clean Energy Investment Program and intends to pursue them with the Sindh Energy Department.
These decisions were made during a recent meeting on the power sector chaired by the Prime Minister, attended by senior officials from relevant authorities.
Currently, a significant number of electricity consumers, particularly in the affluent segment, are opting for solarization of their homes due to load shedding and high electricity costs. Industries and commercial consumers are also transitioning towards solar energy.
