Sindh keeps focus on green energy despite smaller development budget

KARACHI: Sindh has retained a strong focus on renewable and alternative energy in its budget for fiscal year 2026-27, even as the province has reduced its overall Annual Development Plan to Rs720.385 billion from Rs1,018 billion in the previous year.

According to the chief minister’s budget speech, the provincial government has set aside Rs3.67 billion for Solar Home Systems under special initiatives. Of this, Rs1.78 billion has been allocated for off-grid systems and Rs1.89 billion for on-grid systems for poor families. The schemes are intended to improve electricity access in rural and underserved areas, cut reliance on conventional sources and support the broader green energy agenda included in the province’s development priorities.

Solar and climate-linked spending

The solar drive builds on Sindh’s climate-responsive budgeting exercise. In FY 2025-26, climate-tagged allocations stood at Rs140 billion, equal to around 6% of current revenue expenditure. The province now plans to extend this tagging process to the development budget as well.

The budget document indicates that solar programmes are also expected to support local supply chains, installation-related services and integration with national net-metering arrangements. Alongside solar expansion, the White Paper refers to proposed green energy parks combining renewable generation, battery storage and digital infrastructure, as well as efforts linked to carbon sinks for possible credit generation and the promotion of electric vehicle charging facilities.

Waste-to-energy and existing projects

In the alternative energy segment, the Sindh Enterprise Development Fund is continuing support for projects including Biowaste Energy Ventures Ltd’s biomethane scheme in Gadap Town, Karachi. The project has the capacity to produce up to 5 megawatts from organic waste and is presented as an example of circular-economy application.

These renewable and alternative energy measures are part of a broader strategy that also includes climate-resilient infrastructure and projects aimed at carbon credit generation. While the ADP follows a no new schemes policy except for carry-forward projects, the budget keeps attention on completing ongoing green initiatives and delivering their intended benefits.

Conventional energy and fiscal framework

Alongside green spending, the budget also provides for conventional energy-related infrastructure. The largest single allocation in the ADP is Rs10 billion for Thar Coal Rail Connectivity, including last-mile links to Port Qasim. In addition, Rs600 million has been earmarked for improvements to the Farash Complex irrigation network to ensure water availability and safety for the Thar Coal Carrier Channel. The stated aim is to improve coal transport logistics for power generation and support the use of indigenous lignite resources for base-load electricity capacity.

On the industrial side, the budget lowers the target for Infrastructure Development Cess from Rs200 billion to Rs140 billion, a move intended to improve competitiveness for energy-intensive sectors and support industry. Current revenue expenditure under categories that include energy has been budgeted at Rs868.356 billion for FY 2026-27, while current capital expenditure has been kept at Rs281.67 billion. This includes the Viability Gap Fund, meant to back public-private partnerships in infrastructure, including potentially energy-linked projects.

The budget’s broader fiscal approach seeks to balance spending restraint with priority sectors. Under the Medium-Term Fiscal Framework, total revenues are projected to grow at an average annual rate of 11.3% through FY 2028-29, compared with expenditure growth of 7.6%. Federal transfers remain Sindh’s main revenue source, while provincial own-source mobilisation, including through the Sindh Revenue Board, is expected to create additional fiscal room. The budget papers say an operating deficit remains, but the overall trajectory is meant to preserve focus on development priorities.