IMF Flags Concerns Over Pakistan Solar Policy and Power Reforms

The International Monetary Fund has raised concerns over Pakistan’s new solar power policy, placing the country’s energy pricing framework back at the centre of economic and public debate. The development emerged on Wednesday as officials prepared to explain the revised solar mechanism and broader power-sector reforms to the lender.

According to the report, the government’s new approach separates old and new solar consumers instead of applying one uniform model across the board. Existing solar users will continue under the net-metering arrangement, while the authorities have not shifted them to the newer net-billing structure.

Officials linked to the policy maintain that the net-billing model follows international practice and is designed to create a more balanced settlement system between solar consumers and the grid. However, the continued protection of old consumers, including the provision of cross-subsidy support, appears to have drawn the IMF’s attention during ongoing economic discussions.

The matter is sensitive because Pakistan’s power sector remains one of the biggest pressure points in the country’s financial management. Solar adoption has increased rapidly in recent years as households, businesses and industries look for relief from expensive grid electricity, but the transition has also raised questions about who bears the cost of maintaining the national transmission and distribution network.

Officials are also expected to brief the IMF on the privatisation of power distribution companies. The report said privatisation work on three DISCOs is currently in progress, a move the government views as part of a wider effort to reduce losses, improve billing recovery and limit the financial burden created by inefficient public-sector power management.

Alongside the solar policy issue, the authorities have finalised a system for restructuring the transmission network. The first wholesale auction is expected to be held in mid-June 2026, signalling a shift toward a more competitive power market in which electricity can be traded and supplied under a reformed commercial structure.

Pakistan’s energy sector has repeatedly been highlighted in discussions with international lenders because tariff delays, line losses, circular debt and weak recoveries have often created budgetary pressure. Any change in solar pricing, grid compensation or distribution company management is therefore closely watched by consumers, investors and financial institutions.

For ordinary Pakistanis, the issue has a direct household and business impact. A tougher solar policy could affect future solar investment decisions, while a softer approach may preserve incentives for existing users but increase pressure on non-solar consumers who remain dependent on grid electricity.

The next step will be the government’s formal engagement with the IMF on the policy design, DISCO privatisation and transmission reforms. The outcome may determine whether Pakistan adjusts its solar framework further or continues defending the current separation between old and new consumers.