Khawaja Asif defends solar policy amid criticism over taxes, power costs in NA

Defence minister cites capacity payments in long-standing agreements with independent power producers

ISLAMABAD:

Defence Minister Khawaja Asif on Tuesday defended the government’s revised solar energy policy, saying authorities were constrained by long-standing agreements with independent power producers (IPPs) and must balance the interests of solar users and conventional electricity consumers.

Speaking during a session of the National Assembly of Pakistan chaired by Speaker Sardar Ayaz Sadiq, Asif said that while shifting to solar energy was desirable, capacity payment obligations limited policy flexibility.

“So, this is the way forward—go solar. What can we do? Capacity payments have to be made; our hands are tied,” he said.

The debate followed a “calling attention notice” moved by Syed Naveed Qamar of the Pakistan Peoples Party (PPP), who raised concerns over the imposition of tax on solar panels.

Minister of State Shazra Mansab Ali Khan Kharal said the tax had been reduced from 18% to 10% and would apply only to new consumers. She said the policy was based on multiple considerations.

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The National Electric Power Regulatory Authority, in February, revised the terms for net-metered solar consumers to manage rising solar adoption and protect the financially strained grid.

The changes abolished the exchange of electricity units under net metering and proposed cutting the buyback rate for excess solar power from Rs25.9 per unit to Rs11 per unit. Contract durations were also reduced from seven to five years. The amendments took effect on February 9 and do not apply to existing consumers until their current agreements expire.

Opposition lawmakers criticised the move, saying it discouraged renewable energy adoption. Qamar questioned why green energy was being penalised when electricity remained expensive and largely generated from polluting fuels.

Responding to criticism, Asif said past agreements with IPPs—signed two to three decades ago under successive governments, including those of the PPP—continued to bind the current administration. “Discussions were held with IPPs some time ago, but little progress was made,” he said.

Under these agreements, the government must pay power producers in US dollars based on installed capacity, regardless of actual electricity purchases. Over time, revised contracts increased per-unit costs and capacity payments, contributing to a circular debt exceeding Rs2.3 trillion.

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Lawmakers also raised concerns over rising fuel prices. PPP lawmaker Sharmila Farooqi criticised recent increases, saying Pakistan had raised petroleum prices ahead of regional peers and that official briefings had been unsatisfactory.

She said petrol still carried heavy taxation and urged the government to reduce margins for petroleum companies and develop a comprehensive pricing policy. "People ask us how they will manage their livelihoods. Even we hesitate while arranging petrol,” she added.

In response to the ongoing energy crisis, the government on Thursday further increased petrol prices by Rs137 per litre to a record-high of Rs458.4. It was the second major increase in fuel prices in less than a month. However, on Friday night, PM Shehbaz announced a Rs80 per litre reduction in the petroleum levy on petrol.

Meanwhile, Opposition leader Mahmood Khan Achakzai called for political dialogue and unity, warning of unrest in Balochistan and urging greater space for civilian leadership.

“We will have to agree on some key points. We need to tell the military to give us some space. Countries cannot function without their armed forces,” he said. He added that if PM Shehbaz was present, he would go and personally speak to him. "This country can only progress through collective wisdom," he added.

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Separately, lawmaker Engineer Hamid Hussain highlighted the displacement of residents from the Tirah Valley in Khyber-Pakhtunkhwa, saying more than 26,000 families had been registered in Bara amid ongoing operations and were facing severe hardships.

Since the beginning of the year, there have been ongoing large-scale displacements from the Tirah Valley. More than 26,000 families have been registered in Bara as part of what officials describe as a major humanitarian and administrative operation in the border region.

National Assembly Speaker Ayaz Sadiq directed authorities to provide details of affected individuals and said the matter would be taken up with provincial officials, including K-P inspector general of police.