IMF never demanded tax on solar panels, clarifies Aurangzeb

Finance Minister Muhammad Aurangzeb said International Monetary Fund (IMF) never demanded to increase sales tax on solar panels.

Speaking in ARY News program Aitraz Hai, he dismissed reports suggesting that the government had considered imposing taxes on solar panels before the budget. “The matter was never under discussion, nor was there any such demand from the IMF,” he said.

Aurangzeb further said the government is pursuing a series of structural reforms in the energy sector aimed at reducing electricity costs, improving the business environment, and enhancing the competitiveness of key industries, a federal minister said during a media interaction.

Responding to concerns over high energy prices and capacity charges accumulated over successive governments, the minister acknowledged that expensive electricity remains a major challenge for industry, including manufacturing, information technology, mining, and other energy-intensive sectors.

He said the government, in collaboration with Energy Minister Awais Leghari, had already taken steps to eliminate cross-subsidies for industry and was advancing reforms through the wheeling policy and other initiatives designed to improve efficiency in the power sector.

According to the minister, the government is shifting from short-term relief measures toward more comprehensive and long-term structural reforms. These measures, he said, are expected to deliver results over the coming years rather than immediately.

A key component of the reform agenda is the privatisation of electricity distribution companies (DISCOs). The minister noted that Expressions of Interest (EOIs) have already been issued for three DISCOs, while two additional EOIs are expected soon. He expressed confidence that the first batch of distribution companies would be transferred to private-sector management by the end of the year, with the remaining entities to follow in subsequent phases.

The minister stressed that stronger regulatory oversight would be essential alongside privatisation, adding that efforts are underway to ensure the regulatory framework remains robust and effective.

He further highlighted plans to move away from the current single-buyer electricity market model operated through the Central Power Purchasing Agency (CPPA) and transition toward a competitive multi-buyer system. The change, he said, would help dismantle existing monopolistic structures and improve market efficiency.