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

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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Fuel price hike

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.

NA member Noor Alam Khan criticised the Finance Minister, saying, “By raising prices, you have benefited petroleum companies,” he said, adding that the rise in diesel costs has made all goods more expensive. “Now even wheat harvesting has become unaffordable.”

Noor Alam also questioned why petrol prices rose despite Saudi Arabia supplying oil and Iran providing passage. “If Saudi Arabia were supplying oil and Iran was providing passage, then why did petrol prices still rise?”

MNA Alia Kamran submitted an attention notice highlighting tax revenue shortfalls, reporting a Rs430 billion deficit last year and accused the government of attempting to reduce the shortfall by raising petroleum prices.

 

The federal government missed the International Monetary Fund (IMF)-dictated tax target by a wide margin of Rs610 billion. It is the third consecutive quarter that the FBR has missed its tax target. The government is offsetting the tax shortfall with the increase in petroleum levy rates and by drastically reducing development spending.

State Minister Bilal Azhar Kayani said Pakistan aims to secure a primary balance. “We have introduced digital invoicing for cement, tobacco, and sugar, and will increase enforcement collection. Last year we achieved the primary balance, and this year we will meet our targets as well.”

He added that during the ongoing war, the government removed burdens where possible, setting the diesel levy at zero and reducing the petrol levy by Rs80. “Some work has already been done to broaden the tax net.”

PPP MNA Mirza Akhtar Baig also criticised the sudden petrol price hike, asking how much profit companies gained after the price was raised by Rs55 overnight. “Global prices may rise, and increases may be necessary, but they should not be so high that life becomes impossible for ordinary citizens,” he said.

He also questioned the Finance Minister on savings and criticised the federal government’s unjustified expenditures.

Finance Minister Muhammad Aurangzeb, responding to the opposition, defended the government’s fiscal measures in the NA, urging lawmakers to rely on accurate information. “We need to look at the facts,” he said, adding that “some things said in the House have no existence.”

He said that when global oil prices were rising, “an overall subsidy was being provided on petroleum products,” adding that “Rs129 billion in subsidies has been provided so far,” while “Rs100 billion has been cut from the Public Sector Development Programme” and “a third-party audit is being conducted.”

Aurangzeb said targeted subsidies are now being rolled out. “Targeted subsidies are being provided… the process has started, and the first instalments have begun to reach beneficiaries,” he said, noting provinces already have electronic data to identify recipients.

He said the government is monitoring global developments closely. “In several countries, queues have formed for oil,” he said, adding that fuel prices in the UAE have risen sharply, with petrol up by around 30% and diesel by as much as 70%.

The minister said domestic oil and gas prices are also under review, while maintaining that reserves remain stable. “So far, there has been no impact on foreign exchange reserves,” he said, confirming a $1.4 billion Eurobond repayment is due this week.

Aurangzeb said that 26 institutions have been handed over to the Privatisation Commission, though some are not suitable for privatisation. He also acknowledged governance issues, saying corruption had been identified in subsidy programmes at institutions such as utility stores.

He said that lessons from the Covid-19 pandemic are being used to manage the energy crisis, adding that a task force has been set up to shift towards cleaner energy over the next eight to ten years. “We will move towards clean and green energy,” he said, expressing hope that “peace will prevail” and Pakistan’s efforts for regional stability will succeed.

The Gulfstream jet 

MNA Atif Khan raised issue with the newly acquired Gulfstream jet by the Punjab government, demanding that until petrol prices are reduced, Punjab Chief Minister Maryam Nawaz should not travel by jet. “Only then can we know if they are serious.”

The aircraft in question, a Gulfstream G500 bearing registration N144S, arrived in Lahore from North America in December 2025 and began local flight operations on February 6, 2026. The jet that Punjab acquired is a 19-seater VIP aircraft worth a staggering Rs11.7 billion, using the call sign “Punjab 2,” which is conventionally used when the chief minister is on board.

Responding to widespread criticism, Abid Sher Ali, a senator from Pakistan Muslim League-Nawaz (PML-N), said the aircraft belonged to the Punjab government and that its replacement was justified, given that the previous jet was more than 25 years old.

Defence Minister Khawaja Asif said that all four provincial chief ministers use aircrafts and that only Maryam Nawaz is being targeted. “This kind of political posturing is inappropriate,” he said, adding that the Prime Minister continues to use an older aircraft.

MNA Juniad Akbar replied that all four chief ministers have planes, yet the other three are using older aircraft. 

Opposition member Zain Qureshi added that the Chief Minister of K-P does not have a plane and asked why the Punjab Chief Minister bought a Gulf Air aircraft worth Rs11 billion. “Why did she sabotage herself with this decision?” he said.

Balochistan and Tirah 

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.

The National Assembly session was adjourned until 5pm on Wednesday.