The Central Power Procurement Agency (CPPA) has recommended imposing a tax on individuals and businesses installing residential and commercial solar panels, Geo News reported while citing sources within the energy ministry.

The CPPA’s proposal has been forwarded to the power ministry for review, they added.

The proposal suggests levying a tax of Rs2,000 per kilowatt on those installing solar panels for residential or commercial purposes.

It was expected that the government would collect a tax amounting to Rs2,000 per kilowatt from solar panel installations with a capacity of 12 kilowatts or higher.

Individuals installing 12-kilowatt solar panels would be subject to a tax of Rs24,000.

Sources added that the Power Division has sent the CPPA’s proposal for approval to the Prime Minister’s Office. A review of the installed solar panel rates in the country was also under consideration and after the approval of the proposal, a request would be submitted to the National Electric Power Regulatory Authority to reduce the rates of solar panels.

The proposed tax on solar panel installations has generated discussions and concerns among stakeholders, particularly those advocating for the adoption of renewable energy sources.

Critics argue that taxing solar panel installations may hinder the country’s progress towards achieving sustainable development goals and discourage individuals and businesses from investing in clean energy solutions.

As the government reviews the proposal, renewable energy advocates and environmental organizations have urged policymakers to ensure that supportive policies and incentives are in place to encourage the adoption of clean energy technologies.

The development comes a day after Business Recorder reported that the government was contemplating a significant reduction in the rates paid to consumers who generate solar power through net metering.

The potential change comes as solar power adoption in Pakistan has surged, with installed capacity reaching 3,000 megawatts.

Net metering users receive Rs21 per unit for the excess electricity they feed back into the grid. However, the government is considering a drastic cut, bringing the rate down to Rs11 per unit.

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The proposed reduction would translate to a loss of Rs10 per unit for solar power generators.

The government’s rationale behind the move is rooted in the financial burden of capacity charges paid to Independent Power Producers (IPPs).

These charges are incurred regardless of whether the government actually purchases electricity from IPPs.