Pakistan’s plan to reduce rooftop-solar buy-back rates under the net-metering regime is not a simple tariff change; it is a signal of policy confusion. Instead of strengthening confidence in clean-energy investment, the move reflects the state’s recurring habit of reacting to fiscal stress with short-term and short-sighted measures. This is not energy reform—it is administrative firefighting.
Muhammad Arif
For three decades, energy policy has swung between crisis and complacency. The CNG conversion campaign of the 1990s, which hugely impacted gas reserves, the one-sided IPP contracts that created circular debt, load-shedding that induced purchase of inefficient generators, and the ad-hoc incentives for renewables all share one feature—fragmented decision-making without system thinking. As highlighted in my article Planned Failures published by Dawn in 2023, such “policy in pieces” created stranded projects, debt, and distrust. The proposed rollback on solarization continues the same pattern: focusing on tariff arithmetic while ignoring institutional design and the inevitable private spending on imported batteries as consumers begin preparing to go off-grid.
The argument that rooftop-solar users “burden” the grid by avoiding fixed charges is economically misplaced. Pakistan’s generation capacity already exceeds 44,000 MW, while peak demand seldom crosses its 50 percent. Billions of rupees are paid annually in capacity charges for power that is never used. This inefficiency is not caused by solar households but by western-sponsored over-contracting, weak commercial oversight, and regulatory complacency reinforced by vested interests and corruption.
From an economic-policy perspective, efficiency stems not only from inculcating a culture of good governance throughout the energy value chain but also from aligning prices with real system behavior. The current Time-of-Use framework, based on pre-solar consumption patterns, still treats evenings as “peak hours,” even though grid stress now occurs around noon when solar generation floods the system. Revising these timings, creating “sweet-hour” tariffs to encourage daytime industrial use, and promoting flexible demand would flatten the load curve, lower costs, and integrate renewables more effectively—approaches already proven in India, Australia, and parts of Europe.
However, restricting or slowing down solarization will inevitably reduce the share of low-cost renewable energy in the national electricity mix, raising the average cost of generation and intensifying economic heat or in other words further adding to the poor macroeconomic conditions. A smaller solar contribution means greater dependence on imported fuels, heavier foreign-exchange exposure, and higher consumer tariffs. Rising energy prices will suppress industrial output, reduce exports, and slow GDP growth—deepening the very fiscal and economic pressures the policy claims to relieve. In other words, by eclipsing the sun, the government risks amplifying the country’s economic crisis.
The externalities of discouraging solarization extend far beyond generation economics. As grid parity declines, households and industries will migrate off-grid, investing in costly private generation and battery storage. These batteries—mostly imported—will worsen pressure on foreign-exchange reserves and create environmental hazards once discarded. Off-grid migration will erode the pool of high-revenue consumers, forcing utilities to recover fixed costs from fewer, poorer customers and widening inequality. Reduced solar participation will also increase reliance on thermal plants, raising fuel import bills, expanding the circular-debt stock, and inflating consumer tariffs. The chain of unintended consequences—economic, environmental, and social—demonstrates how isolated decisions produce system-wide losses that no fiscal saving can offset.
Meanwhile, thousands of prosumers operating rooftop-solar systems under legitimate contractual arrangements or licenses are protected by NEPRA’s 2015 Regulations. Any unilateral revision could violate these rights and invite litigation, further eroding investor confidence.
The deeper issue is governance, not generation. Institutions designed to ensure fairness and transparency have themselves become examples of regulatory capture. As noted in Unbreakable Regulatory Captures (2025), regulatory decisions often reflect political influence or corporate lobbying rather than independent analysis. Public hearings have become ceremonial; and enforcement of decisions, selective. When regulators lose credibility, every policy—however rational on paper—collapses in execution.
The environmental contradiction is equally striking. Pakistan has pledged to reach net-zero emissions by 2050, yet it discourages the most direct citizen-driven form of decarbonization. As argued in in my Article carried by Dawn, “Net Zero: Pakistan Perspective” (2023), developing countries must pursue low-carbon growth consistent with local realities. Undermining rooftop solar weakens that pledge and signals inconsistency to development partners and financiers who increasingly link concessional funding to credible green-transition policies.
What Pakistan requires is not another circular on tariffs but a Governance 5.0 approach—integrated, data-driven, and citizen-centric. Governance 5.0 views institutions, technology, and citizens as parts of one living ecosystem where accountability, transparency, and innovation reinforce one another. Energy reform must therefore move beyond departmental silos and adopt a comprehensive framework that combines economic efficiency, institutional integrity, and environmental responsibility.
Such a framework must depoliticize and professionalize energy institutions so that appointments rest on merit rather than patronage. Markets should be rationalized by revisiting uneconomic capacity contracts and enforcing competitive, merit-order dispatch. Technology must lead policy—smart metering, digital monitoring, and open data can turn guesswork into governance. Tariffs should influence behavior: daytime industrial discounts and accessible credit for solar installations can shift demand into hours of natural generation. The legal environment must guarantee predictability so that today’s commitments remain tomorrow’s assurances.
Simultaneously, energy planning must align with international net-zero obligations while keeping electricity affordable. Integration with global climate frameworks can unlock technology transfer and concessional finance, reducing dependence on imported fuels. Every initiative should meet the test of economic efficiency—reducing losses, improving asset use, and encouraging competitiveness instead of preserving inefficiency. Finally, a coherent long-term vision must address the circular-debt trap that drains public finances through transparent audits, timely settlements, and efficient recovery systems.
These directions are not separate pillars but interconnected elements of a single reform architecture. Without institutional reform, market liberalization fails; without efficiency, environmental goals collapse; without fairness, public support evaporates. Governance 5.0 demands coherence across ministries and regulators so that fiscal, social, and environmental outcomes advance together.
Rooftop-solar users are not freeloaders—they are partners in Pakistan’s energy future. They reduce fuel imports, relieve grid pressure, and represent the civic initiative that good governance should reward. Penalizing them for institutional inefficiency undermines both trust and transition. Pakistan cannot close fiscal gaps by taxing sunlight; it must close governance gaps through integrated, transparent, and future-ready policymaking.
If the goal is to cool the nation’s economic heat, the solution is not to eclipse the sun but to reform under its light—through data-based planning, institutional integrity, and citizen participation. Only such a comprehensive framework can move Pakistan toward energy security, fiscal stability, and climate responsibility—the true promise of Governance 5.0.
(Opinions expressed in this article are the author’s own and do not necessarily reflect WNAM’s editorial policy)
The author is former Member, OGRA, Managing Partner at Arif & Associates, a boutique petroleum and business law consultancy, a thought leader in energy, governance, regulatory framework, economic policy, and consumers rights advocate; [email protected] | 0333 5191381
