Key points
- Pakistan plans to extend solar net metering payback period
- Crackdowns on power theft and improved recoveries have cut losses
ISLAMABAD: Pakistan is gearing up for a sweeping transformation of its power sector as Federal Minister for Power Awais Leghari announced a comprehensive reform agenda.
The reforms include reducing returns on solar net metering, ending electricity duty collections on behalf of provinces, and intensifying efforts to combat electricity theft.
Addressing a press conference, Leghari stated that a revised proposal would soon be submitted to the federal cabinet, recommending an extension of the investment recovery period for solar net metering from the current 1.5 years to as long as three years.
He clarified that the plan aims to ease pressure on the national grid amid rising solar adoption, while safeguarding the interests of existing users who embraced the scheme under government policy.
“Consumers embraced solar under our policy, and we won’t penalise them,” Leghari assured. “But unchecked returns have become unjustified and risk destabilising the grid. Correction is necessary — not as a punishment, but as a safeguard.”
Solar curtailment
Leghari clarified that the proposed solar reforms would not lower electricity tariffs but could prevent further hikes. With surplus electricity weighing down the grid, the government is exploring ways to offload 5,000–6,000MW of extra capacity to energy-intensive industries like data centres and crypto mining — discussions that are already in motion with the International Monetary Fund (IMF).
Market opening
The minister also confirmed that a summary had been moved for cabinet approval to finalise long-awaited rules on “wheeling charges” — a critical step toward launching a competitive electricity trading market. The change is set to shake up the current monopoly model by allowing private buyers and sellers to trade power via the national grid.
On another front, the federal government is moving to stop acting as a collection agent for provincial electricity duties. Letters have been sent to all four chief ministers, but only one has responded so far. “Discos can’t continue to bear this administrative load,” Leghari said. The final decision awaits cabinet nod once all provinces respond.
Major cost savings
Highlighting major cost savings, Leghari said negotiations with independent power producers (IPPs) and the cancellation of 10,000MW in future capacity had saved the country over Rs7 trillion — Rs3 trillion from past agreements and another Rs4 trillion from avoided future liabilities.
He said net metering reform, too, could save billions if executed with balance.
Turnaround efforts
In one of the most candid disclosures in recent memory, the power minister laid bare the sector’s bleeding edges: a staggering Rs591 billion loss in fiscal year 2024 due to poor billing and technical inefficiencies by distribution companies (Discos).
However, Leghari claimed a turnaround was underway, thanks to merit-based appointments and tighter governance. Losses were reduced by Rs191 billion in FY25, with recoveries rising from 92.4 per cent to 96.6 per cent. Punjab and Islamabad Discos even exceeded 101 per cent recovery by clearing past dues.
Transmission and distribution (T&D) losses — mainly theft — also dipped slightly, from 18.3 per cent to 17.6 per cent, saving Rs10 billion.
Yet, not all was smooth sailing. Efforts to revamp Hyderabad and Sukkur electric boards were delayed due to litigation, costing another Rs30 billion in potential savings.
One glaring example: Lahore Electric Supply Company (Lesco) recently uncovered widespread electricity theft at four steel and furnace factories using tampered meters. Leghari alleged that the factory owners tried to pressure officials investigating the scam — but the anti-theft campaign held firm, backed by Prime Minister Shehbaz Sharif.
LNG reality check
The minister also addressed K-Electric’s increasing dependence on the national grid — now importing 1,600MW, projected to rise by another 400MW within weeks. Leghari advocated for tariff uniformity across the country, especially in fuel cost adjustments.
He also admitted past LNG contracts were flawed, based on the false premise that imported gas would fuel plants at full capacity. “No plant should run without following fuel merit order,” he said bluntly, calling the violation of economic merit a “mortal sin.”
The road ahead
With reforms stretching from tariff rationalisation and theft busting to competitive markets and industrial courting, the Power Division appears determined to jolt the sector into financial and operational health.
“We’re not just plugging leaks — we’re redesigning the pipeline,” Leghari said.
Whether the cabinet, provinces, and powerful stakeholders will align with that vision, however, remains the next big test.
