In the enchanting landscape of Mubarak Village, located thirty kilometers east of Karachi, the absence of light has long cast a shadow over the daily life of the fisher community. This resilient settlement, home to 10,000 people, refuses to be left in the dark.
In the enchanting landscape of Mubarak Village, located thirty kilometers east of Karachi, the absence of light has long cast a shadow over the daily life of the fisher community. This resilient settlement, home to 10,000 people, refuses to be left in the dark.
The Sindh government had promised locals in Mubarak Village to provide electricity. In 2009, a power project was initiated for a coastal village along the Karachi coast, located near the provincial border of Sindh along Balochistan, but, to date, no significant progress has been made in fulfilling the commitment. Even though electricity poles with wires installed on some can be seen in the village, those wires have never been energized. The power plant, operated by a private independent power producer (IPP), is located just a few kilometers from this fisher village, with the scenic beauty of a clean beach and hills on the other side.
Rafique Usman, a resident of Mubarak village, says, “I installed a 150-watt solar panel system on the roof of my home, which initially cost me Rs. 35,000. However, I had to replace the battery every two years.”
Usman's livelihood revolves around his fishing expeditions. With access to sustainable electricity, the women in his house are able to pursue various crafting endeavors and build on their primary source of income.
“The soaring cost of solar batteries has become increasingly unaffordable, especially when the only reliance for electricity is through solar panels,” Usman expresses his concern.
Hurdles in transitioning to a solar system
Even in Karachi, the largest metropolitan area in Pakistan, people are suffering from serious electricity-related problems. This is because electricity demand in Pakistan has surged to 27,000 megawatts (MW) per day during the ongoing summer season, while the power supply from all generation sources is 21,144 MW. As a result, citizens have to face long hours of power cuts that have disrupted their daily lives.
Waqas Hussain, a resident of Karachi and the father of four children, lives in a modest two-room house located in North-Nazimabad. Waqas is an employee of a private company and earns a monthly income of Rs. 50,000. Waqas Hussain says he had to cut his domestic expenses drastically to have solar panels installed in his house so that he can ensure a smooth supply of electricity for his family.
“When I initially considered purchasing a solar panel last year in July, the price of a single plate was approximately Rs. 15,000. By the time I saved enough money and finally intended to install solar panels, the cost had significantly escalated,” Hussain says.
“Due to sky-high inflation and the precarious economic state of the country, I have to wait a few more months to be able to afford the desired type of solar system,” Hussain complains.
Abdul Wahab Affan, the owner of Sun and Solar Solutions, a shop in Karachi’s Saddar area, says that the installation of solar panels will not provide electricity all day long to people like Waqas Hussain.
“There is a prevalent belief among people that installing solar panels will liberate them from reliance on power distribution companies, and they will not have to pay heavy bills,” Affan says and adds that this independence will not be achievable for everyone because it requires the investment of several million rupees in solar panels as well as batteries that can store electricity produced by these panels.
“The installation of a solar system that can generate sufficient power requires a substantial amount of money, which may be beyond the means of an average middle-class man,” Affan explains.
In the 2022-2023 fiscal budgets, the federal government removed customs duties on the import of raw materials for the manufacturing of solar batteries, panels, and inverters. Then finance minister Ishaq Dar later claimed that the step was taken to promote renewable energy in Pakistan.
However, Rana Abbas, a member of the AE Solar Power Association, was disappointed with the recently announced budget.
“The removal of [duties] will have minimal impact on the prices of solar panels and their associated equipment because the general sales tax applicable to this appliance is still 18 percent, with three percent withholding tax,” Abbas says.
Mustafa Amjad, Program Manager at Renewables First, an Islamabad-based think tank working on renewable energy, shares a similar concern. “Removing the tax will somewhat reduce the cost of solar panels, but their price still remains out of the reach of most common people, given the economic challenges faced by the country. Not everyone can spare a million rupees to have solar panels installed,” he says.
Abbas, therefore, believes that the government’s efforts to promote solar energy in Pakistan are merely superficial.
The Economic Survey of Pakistan’s 2022-23 edition seems to confirm his point of view. It says that the share of renewable energy produced from wind and solar sources remains a meager 4.2 percent. Even though the government’s own Indicative Generation Capacity Expansion Plan (IGCEP) envisions that this share will reach 30 percent by 2031, this number seems highly unlikely to be achieved because of several tax-related and regulatory barriers.
“If the government truly intends to promote green energy in Pakistan, it must promote the local production of solar panels and their related components. This will not only reduce the cost of solar systems in the country but will also provide job opportunities to local people,” he says.
The State Bank of Pakistan (SBP) launched a financing scheme in June 2016 to promote renewable energy in Pakistan. This scheme was divided into three categories. Category I supported projects with 1 MW to 50 MW capacity for self-use or selling to the grid. Category II financed up to 1 MW projects for self-use or selling to distribution companies, whereas Category III supported Renewable Energy Investment Entities for up to 5 MW projects. The interest rate on loans disbursed under it was set at only six percent – much below the normal interest rate of more than 21 percent being charged on other bank loans.
However, SBP spokesperson Abid Qamar revealed that loans under this scheme are no longer available.
Renewable energy experts want this scheme revived immediately. Basit Ghuari, the senior program associate at Renewables First, calls the defunct financing scheme “a landmark achievement of the government” because it provided highly concessional loans to the renewable energy sector.
“Government needs to realize that transitioning to renewable energy requires a multi-faceted approach,” he says. This approach, according to him, should include the local production of solar panels and their associated equipment.
“First of all, this will require a focus on research and development piloting, manufacturing, and assembly studies,” Ghauri explains.
Mustafa Amjad, however, points out that the lack of trust in the government is a major roadblock hampering investment in the renewable energy sector. Amjad mentions a recent auction for setting up renewable energy projects to produce 1200 megawatts of electricity.
“In spite of the fact that the government spent millions of rupees on road shows abroad to attract investors for these projects, no investor took part in the auction,” Amjad says.
“The biggest challenge facing the renewable energy sector, therefore, is that investors fear unpredictability in government policies. They, in fact, harbor concerns that the government’s decision to remove import duties on solar equipment today may also be reversed in the near future,” Amjad added.
The writer is a Karachi-based journalist.
