On June 11, according to foreign media reports, the Pakistani government proposed an 18% general sales tax (GST) on imported solar panels in the 2025-2026 federal budget submitted to the National Assembly on June 9.
Finance Minister Muhammad Aurangzeb said the move would help boost domestic PV manufacturing, while the Pakistan Solar Energy Association (PSA) called on the government to reconsider the policy. In a statement, the
Pakistan Solar Energy Association pointed out that the policy could reverse the significant progress in the deployment of solar energy in Pakistan. According to its domestic analysis, the installed capacity of net metered solar energy in Pakistan has increased from 1.3 GW in fiscal year 2023 to 2.5 GW in 2024. And reach 4.9 GW in March 2025.
The association stressed that due to the lack of large-scale and efficient photovoltaic manufacturing capacity in Pakistan, the government's claim that the tax would protect local manufacturing was "fundamentally flawed" , while Waqas Moosa, chairman of the association, also said. Such a tax would hinder the spread of solar energy and undermine Pakistan's climate goals.
It is reported that the rapid growth of Pakistan's net metered solar installed capacity is synchronized with the large-scale import of domestic components. In August 2024, there were media reports that Pakistan imported 13GW of Chinese components in the first half of 2024.
That pace of growth has raised concerns among Pakistan's policymakers and utilities that unchecked solar power could disrupt the country's electricity market, and that a reduction in the industry's payments to the grid could burden centralized utilities that are already under financial pressure. Shehbaz Sharif, Prime Minister of
Pakistan, and Syed Faizan Ali Shah (Syed Faizan Ali Shah), member of the Solar Energy Commission, said in 2024 that. Unlimited PV generation will be a major issue , as its domestic utilities have long-term dollar-denominated power purchase agreements with independent power producers , which must be fulfilled regardless of the amount of electricity generated.
The budget will be debated in Pakistan's National Assembly and the government aims to have it approved by the end of June.
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