The Oursun Solar Tariff Scandal: 132 Cents per Unit, Explained
A solar plant approved at 33 times the international rate, while its owner served on Pakistani government energy advisory positions
By Asad Baig · Lahore · April 2026 · Approx. 4-min read
The number
While the global price for solar electricity in competitive auctions in 2017 and 2018 was around 3 to 4 US cents per kilowatt-hour, the Oursun Solar plant in Pakistan was approved at approximately 132 US cents per kilowatt-hour.
That is approximately 33 times the international rate.
The plant is owned by Nadeem Babar, who at the time of the tariff approval was serving on Pakistani government advisory positions related to energy policy. He went on to become Chairman of the Energy Reforms Task Force and Special Assistant to the Prime Minister on Petroleum under the Imran Khan government in 2018.
This article walks through how the Oursun tariff was set, why it was approved at such a multiple of the international rate, and what the case tells us about the structure of Pakistani upfront tariffs more broadly.
How upfront tariffs work in Pakistan
Pakistan introduced upfront tariffs for renewable energy projects under the 2006 framework. Instead of competitive bidding, NEPRA set fixed tariffs for renewable plants based on assumed capital costs, assumed efficiency, and assumed risk premiums. Plants that opted into the upfront tariff received it without competitive auction.
The upfront tariff was supposed to be calibrated to international benchmarks. NEPRA was meant to verify that Pakistani approved tariffs reflected actual market conditions for solar, wind, and other renewable technologies.
In Babar's Oursun case, the upfront tariff approval at 132 cents per kWh was not calibrated to international benchmarks. The 33-fold gap with global competitive auction rates of 3-4 cents per kWh indicates either:
- A regulatory failure (NEPRA did not consult international benchmarks before setting the upfront tariff)
- A regulatory capture (NEPRA consulted benchmarks but chose to approve tariffs disconnected from them)
- A structural problem in the upfront tariff methodology (the assumptions baked into the tariff produced an unrealistic price even with honest implementation)
The 2020 Power Sector Inquiry Report addressed all three possibilities, and concluded that elements of all three were present across the upfront tariff regime, not just for Oursun.
Why the tariff was so high
Three factors compounded.
Capital cost assumptions: The upfront tariff included a capital cost component based on per-megawatt construction costs that did not reflect the dramatic global cost reductions in solar PV between 2010 and 2017. Solar panel costs had fallen by approximately 80 percent during that period. Pakistani upfront tariffs were not adjusted in line.
Risk premium loading: A "country risk" premium was added to compensate sponsors for investing in Pakistan. The premium was substantial. Some analyses suggest it exceeded the actual risk by significant multiples.
Operations and maintenance assumptions: Annual O&M costs were assumed at levels that were higher than the actual operating costs of solar plants in comparable markets.
The combination produced an upfront tariff that, while technically defensible component by component (each input could be argued for individually), produced a final number that was 33 times what competitive bidding would have generated.
THE OURSUN MATH IN ONE BOX
Global solar tariffs 2017-2018: 3 to 4 US cents per kWh in competitive auctions. Oursun Solar Pakistan: approximately 132 US cents per kWh under the upfront tariff. The 33-fold gap is the difference between competitive market discovery and Pakistan's bureaucratically determined upfront pricing.
The conflict of interest dimension
What makes the Oursun case particularly revealing is the conflict of interest. Nadeem Babar was simultaneously:
- The owner of a solar plant being approved at the upfront tariff
- An advisor to the Pakistani government on energy policy
- A figure with influence over the regulatory environment that determined the tariff
When he was subsequently appointed (in 2018) as Chairman of the Energy Reforms Task Force, the conflict became formal. He was now responsible for advising on reform of the very tariff structure that was producing his Oursun returns.
The 2020 Power Sector Inquiry Report named him as a direct beneficiary of IPP payments. He was excluded from the cabinet meeting that discussed the report on grounds of conflict of interest. The report was subsequently buried.
I have written about Babar's broader career trajectory and what it tells us about Pakistani energy governance at Nadeem Babar: The Architect Inside, and the Oursun Solar Tariff.
What the case tells us
The Oursun scandal is, in some ways, a particularly clean illustration of how Pakistani upfront tariffs produced excess returns to specific owners. The math is mechanical. The international benchmark is publicly available. The Pakistani approved tariff is a public document. The 33-fold gap is undeniable.
What is also undeniable is the ownership relationship. Babar's involvement in the plant is documented in his own published biographical statements. His simultaneous government advisory roles are matters of public record.
The case is therefore a clean test of whether the Pakistani regulatory and political system is willing to address a clearly documented case of conflict of interest with a clearly documented financial impact. As of April 2026, six years after the 2020 inquiry, no formal action has been taken. The Oursun tariff has not been revised. Babar continues to hold his shareholding (which he publicly admitted exceeded 25 percent at the time of his government appointments).
This is what unaddressed accountability looks like in Pakistani electricity policy. Not denial of the facts. Just inaction on them.
What you should take away
Two things.
Oursun Solar received a tariff 33 times higher than global solar rates. This is documented. The math is mechanical. The conflict of interest with the owner's government roles is a matter of public record.
Six years after the 2020 inquiry, no action has been taken. The Oursun tariff has not been revised. The owner has not faced legal consequences. The case illustrates how Pakistani accountability mechanisms operate when applied to politically connected individuals.
Now you know the Oursun story. Pass it on.
Thank you for reading.
, Asad Baig, Lahore, April 2026
Frequently asked questions
What is the Oursun Solar tariff scandal? Oursun Solar, owned by Nadeem Babar, obtained a tariff of approximately 132 US cents per kWh under Pakistan's upfront tariff structure, while global solar tariffs in competitive auctions during the same period were 3-4 cents. The tariff was approved while Babar was simultaneously serving on Pakistani government advisory positions related to energy policy.
Why was Oursun approved at such a high tariff? A combination of unrealistic capital cost assumptions, excessive country risk premium, and high O&M cost loading. The upfront tariff methodology produced rates disconnected from international benchmarks. Whether this resulted from regulatory failure, regulatory capture, or methodology problems was addressed in the 2020 Power Sector Inquiry Report.
Has the Oursun tariff been revised? No. As of April 2026, six years after the 2020 inquiry named Babar as a direct beneficiary of IPP payments, the tariff has not been revised and no formal action has been taken.
Sources and notes
- NEPRA upfront tariff determinations for Oursun Solar (nepra.org.pk)
- IRENA solar auction price databases (international comparison data)
- Power Sector Inquiry Report 2020 (ARY News mirror)
- Pakistan Today / Profit, Energy task force chairman allegedly owes Rs. 800m to SNGPL (14 January 2019)
- The News, Appointment of new special assistant on petroleum triggers controversy (21 April 2019)
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Asad Baig