Aurangzeb says IMF had not asked for a tariff on solar panels

He disputed allegations that the government had considering taxing solar panels before the budget. ‘There was never any such demand from the IMF and the topic was never discussed,’ he said.

Aurangzeb stated in a media interaction that the government is working on a set of structural reforms in the energy sector to bring down electricity rates, improve the business environment and increase the competitiveness of major industries, according to a federal minister.

In reply to questions on the high energy costs and capacity charges carried over by successive governments, the minister said expensive power continues to pose a serious problem to industry including manufacturing, information technology, mining and other energy-intensive industries.

He said the government, in partnership with Energy Minister Awais Leghari, had already taken steps to remove cross-subsidies for industry and was pursuing changes through wheeling policy and other measures to increase efficiency in the electricity sector.

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The government is moving from short-term relief to more extensive, long-term structural reforms, the minister said. These efforts are to be expected to bear fruit in the coming years rather than immediately, he said.

Privatisation of energy distribution companies (DISCOs) is a crucial part of the reform agenda. The minister said three DISCOs had already been awarded expression of interest (EOI) and two more EOIs will soon be awarded. He said he was certain that the first batch of distribution businesses would be handed over to private sector management by the end of the year, with the rest to follow in phases.

There would need to be more regulatory control to accompany privatisation and work was beginning to ensure the regulatory system would be robust and effective, he said.

He also emphasised the ambitions to shift away from the existing single-buyer energy market model, controlled through the Central Power Purchasing Agency (CPPA), to a competitive multi-buyer system. “The change will help dismantle existing monopolistic structures and improve market efficiency,” he said.