Islamabad: Pakistan's solar boom, which has saved the country more than $12 billion in fossil fuel imports and helped millions of households navigate a regional energy crisis, is facing challenges due to new taxes and fees, a prominent business leader warned on Wednesday.
According to Islamabad Chamber of Commerce and Industry, Shahid Rasheed Butt, a former president of the Islamabad Chamber of Commerce, stated that an 18 percent general sales tax on imported solar panels and newly imposed fixed monthly charges on solar users threaten to reverse the citizen-led energy transition that had elevated Pakistan to near world-record levels of solar adoption. Between 2022 and 2024, the country's fossil fuel imports decreased by 40 percent, reducing its exposure to supply disruptions in the Strait of Hormuz, where regional hostilities threaten critical shipping routes.
Butt estimated that the solar boom could save an additional $6.3 billion by the end of 2026 at current prices. However, recent policy decisions are impeding that trajectory. The 18 percent sales tax threatens consumer affordability and investor confidence.
The government has also imposed fixed monthly electricity charges on all three-phase meter consumers, ranging from Rs 2,363 to over Rs 10,125 per month, depending on approved load capacity. Additionally, the net metering system for new solar users has been replaced with a net billing arrangement, offering only around Rs 11 per unit for electricity fed back to the grid.
This situation contrasts with Pakistan's energy reality, as the country relies on the Middle East for more than 90 percent of its oil and gas imports. Recent petrol and diesel price increases of 20 percent have already raised transport costs and the price of basic goods, affecting low-income households the most. Solar adoption had provided a partial buffer for millions. Any policy that increases the cost of solar equipment or penalizes grid-independent consumers directly compromises national energy security at a critical time.
Butt urged the government to eliminate all duties and sales taxes on solar components, reverse the fixed monthly meter charges, and reinstate fair net metering rates, arguing that the state's role is to facilitate a transition, not obstruct it. Otherwise, it will drive users off-grid, exacerbating utility losses amid a circular debt exceeding Rs 3.5 trillion.