ISLAMABAD: The government is set to launch a 10-year subsidised electric fan replacement programme, aiming to promote energy-efficient appliances across all power distribution companies, including K-Electric.

The scheme, backed by a Rs2bn fund under the “On-Bill Islamic Financing” model, will gradually replace 88 million old, inefficient fans —about 60pc of the 147 million fans currently installed nationwide. The initiative is expected to yield peak energy savings of 6,000–7,000MW and is likely to be formally unveiled by the prime minister later this month.

Loans will be offered at Karachi Interbank Offered Rate plus 2pc, with the government providing a 10pc first-loss guarantee, according to a source present at a high-level meeting chaired by Finance Minister Muhammad Aurangzeb.

The meeting reviewed progress on the Prime Minister’s Fan Replacement Programme and was attended by the power minister, SBP governor, Pakistan Banks Association chairman and senior officials from finance, power and related departments.

10-year drive targets 7,000MW peak energy savings

Participants were briefed on the programme’s operational readiness, including updates from the National Energy Efficiency and Conservation Authority (Neeca) on agreements with participating banks, banking system integration, and the role of the Punjab Technology Investment Board and Power Information Technology Company (PITC) in facilitating technological implementation.

Under the scheme, banks will have the first right to deduct loan instalments directly via electricity bills. Power companies, including K-Electric and distribution companies (Discos), will implement this on-bill financing model. Online payment agents such as Nadra, 1-Link, and banks will also facilitate these deductions.

PITC will provide live API access to consumer data for onboarding eligible electricity consumers through the Punjab Information Technology Board.

Neeca, responsible for the overall programme implementation, has already engaged leading fan manufacturers and is developing a digital portal to manage the replacement drive.

The initiative targets the inefficient fan stock nationwide, particularly in small households, and seeks to reduce the 11,000MW cooling load experienced during peak summer months. The government estimates it could significantly reduce capacity payments while nudging the market towards higher-efficiency appliances.

With 22 million compliant electricity consumers currently in the system, the programme offers flexible repayment periods of 6 to 18 months, depending on financing terms. The net replacement cost per fan is estimated at Rs10,500.

Neeca and the Ministry of Climate Change will jointly manage the programme’s carbon financing claims.

Finance Minister Aurangzeb highlighted the prime minister’s strong commitment to the initiative, underscoring its role in promoting energy efficiency, financial inclusion, and economic stability.

He noted that the programme could positively influence consumer behaviour, reduce energy demand, and deliver broad economic benefits.

He appreciated the proactive involvement of stakeholders, particularly the banking sector, and directed that all preparatory actions be finalised within two to three weeks to allow for the launch of the first phase.

The meeting concluded with a joint reaffirmation of commitment from all stakeholders to ensure the timely and effective rollout of the programme, which is part of the government’s broader energy and economic reform agenda.

Published in Dawn, July 8th, 2025