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Pakistan power sector debt, tariffs and solar policy shifts

Updated 3 times since CLSTR started tracking revisions of this situation.

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2026-08-26 16:09 UTC → 2026-08-28 15:34 UTC · added ~~removed~~

In late July 2026, Pakistan's power sector faced mounting financial pressure. The government’s reduction of budgetary support by Rs 98 billion added Rs 61 billion to circular debt for fiscal year 2025–26, bringing the total to Rs 1.638 trillion. Despite this, reforms lowered distribution-company (DISCO) losses to Rs 326 billion from Rs 397 billion the previous year. Prime Minister Muhammad Shehbaz Sharif ordered a technical audit of DISCO billing systems and emphasized smart-meter installation and anti-theft measures. Simultaneously, the National Electric Power Regulatory Authority (NEPRA) held hearings on a request by the Central Power Purchasing Agency to raise electricity tariffs by Rs 1.20 per unit under the Fuel Cost Adjustment (FCA) mechanism. This follows a recent Rs 0.34 per unit hike. To manage peak evening demand, which has exceeded 26,000 MW, the Power Division proposed a cash-incentive scheme for solar-battery owners, offering Rs 18–22 per kilowatt-hour for electricity supplied between 5 p.m. and 10 p.m. This follows a surge in battery-storage imports, which reached 652.2 MWh in April 2026. In late August, the Power Division moved to expedite thousands of pending rooftop solar net-metering connections. This directive aims to protect consumers who completed requirements before a February policy overhaul that replaced the net-metering framework with a net-billing system, which significantly reduces the value of electricity sold back to the grid. To ensure eligibility, the Pakistan Information Technology Company (PITC) has been tasked with reviewing billing software to verify applications from users who had already paid demand notices or received licenses prior to the February 9 cutoff. Additionally, NEPRA is reviewing a new request from the Central Power Purchasing Agency for a Rs 2.52 per unit electricity tariff hike for July 2026, driven by high generation costs for diesel, imported coal, and LNG.

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