Pakistan Cuts Solar Buyback Price After Chinese Panel Boom

(Bloomberg) -- Pakistan has lowered the rate it pays for electricity from solar users, after a massive boom had made the nation the third-largest destination for Chinese panels. 

The Economic Coordination Committee reduced the price by almost two-thirds to 10 rupees a unit for new net-metered costumers to ease the growing financial burden on grid consumers, according to a finance ministry statement. The lower cost will be applicable to existing customers after their current agreements end with power suppliers, it added. 

Millions of consumers and businesses in Pakistan have switched to solar as an alternative since the national grid power prices have tripled for some since 2021. There are about 283,000 net metered users and such a system would transfer a financial burden of 4 trillion rupees ($14.3 billion) to grid consumers by 2034 unless the change is made, according to the statement.

Pakistan is under pressure to reduce financial losses that has long forced the nation to seek financial help repeatedly from global lenders and friendly states including China, Saudi Arabia and the UAE to support its weak economy. Financial losses that have forced the nation to repeatedly seek financial help from the International Monetary Fund with the latest $7 billion program demanding the country to make its energy sector financially sustainable.

Pakistan is also renegotiating contracts with power producers to reduce the burden but global lenders have warned the government that it will undermine investor confidence and future payments.

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