Amidst mounting criticism over a revised net metering policy that had reduced the buyback rate from Rs. 27 to Rs. 10/unit and imposed additional taxes on solar energy users, the federal cabinet has directed the Power Division to revisit the decision after inviting feedback from all stakeholders.
Chaired by Prime Minister Shehbaz Sharif, the cabinet’s weekly meeting decided to broaden the scope of consultations on the solar net metering regulations recently approved by the Economic Coordination Committee (ECC). It directed the Power Division to re-submit the recommendations in light of feedback from stakeholders.
The ECC’s decision had attracted the ire of consumers and businesses, who had criticized the government for discouraging the adoption of renewable energy through the regressive measures. As the criticism mounted, the government had sought to clarify that it was committed to promoting renewable energy, with the prime minister directing officials to address the concerns through facts.
The cabinet also approved a reduction to the power tariff in light of renegotiated agreements with Independent Power Producers and through the “cushion arising out of changes in international oil prices and other measures.” Earlier this month, the Prime Minister’s Office had defended a decision to maintain petroleum prices—despite a reduction in the global market—by claiming the difference would be passed onto consumers through an upcoming relief in the power tariff.
Additionally, the federal cabinet permitted the Central Power Purchasing Agency to enter into new contracts with IPPs that run on bagasse. It also approved further modifications to income tax, sales tax on services, and federal excise duties within the Islamabad Capital Territory.
Reacting to concerns from the education sector, the cabinet reinstated tax rebates for contractual teachers and researchers through the approval of the Income Tax Second Amendment Bill, 2025.
On the recommendation of the Ministry of Law and Justice, the cabinet approved the Whistleblower Protection and Vigilance Commission Act, 2025.
IMF program
In his address to the cabinet, Prime Minister Shehbaz Sharif lauded the successful inking of a staff-level agreement with the International Monetary Fund for a $1 billion second tranche of the ongoing $7 billion bailout and a new $1.3 billion arrangement under the Resilience and Sustainability Trust.
Sharif said the facility was brought about by collective sacrifices of the nation, acknowledging the hardships faced by ordinary citizens, especially the salaried class.
Without naming anyone, the prime minister criticized voices who had claimed the government would need to introduce a mini-budget and impose new taxes to secure the new staff-level agreement. He emphasized the need to reduce debt to foster sustainable economic growth, adding that the path to economic stability is long and fraught with challenges but would be achieved through national unity.
Detailing the government’s macroeconomic successes, he said the IMF had targeted a 10.2% tax-to-GDP ratio, but the economic team had achieved 10.6%, a significant achievement. “This excellent performance indicates a 26 percent rise in tax revenue to date,” he said, adding the ongoing fiscal year’s tax collection goal was Rs. 12.9 trillion and was revised to Rs. 12.3 trillion during this month’s talks with the global lender.
According to Sharif, the government’s reforms in the sugar industry have netted an extra Rs. 12 billion in taxes this year compared to last year. He said he hoped to hit total collections of Rs. 60 billion by the end of the year. “This approach will soon be applied to the cement, tobacco, and textile industries,” he said.
The prime minister also hailed the government’s Ramzan Package, crediting its success to the digital wallet system that distributed funds to eligible families transparently. He stressed on the need to promote peace and eradicate terrorism, stressing that peace, growth and economic development are interlinked.
Sharif commended Deputy Prime Minister Ishaq Dar, Finance Minister Muhammad Aurangzeb, Planning and Development Minister Ahsan Iqbal, Commerce Minister Jam Kamal, Energy Minister Ali Pervaiz Malik, Federal Board of Revenue Chairman Rashid Langrial, and relevant officials for their efforts in successfully finalizing the agreement with the IMF. He said the Army chief had also played an “instrumental” role in achieving the accord.
The prime minister concluded his address by welcoming the Nishan-e-Pakistan award conferred on the late Zulfikar Ali Bhutto by President Asif Ali Zardari, calling it a fitting tribute to a “national icon.” He also led Fateha for Chief of Army Staff Gen. Asim Munir’s mother, who passed away earlier this week.