Govt slaps Rs238 levy on gas for captive power plants

ISLAMABAD: The federal government has imposed a Rs238 per million British thermal units (MMBTU) levy on gas supplied to captive power plants, a key step to meet the International Monetary Fund (IMF) conditions and reduce electricity tariffs nationwide.

The charge, introduced under the new Off-The-Grid Captive Power Plants Levy Act 2025, targets industries running their own power generation units. The government plans to funnel the revenue into lowering power tariffs by about Rs0.90 per unit in the first phase, benefiting domestic, commercial and industrial consumers.

“This measure is part of a structural benchmark under the $7 billion IMF programme to shift industries to grid power,” a senior official said. “Until then, captive power plants will pay an off-the-grid levy to support power tariff reductions.” The levy, billed and collected by Sui Northern Gas Pipelines Limited and Sui Southern Gas Company Limited, applies to both natural gas and regasified liquefied natural gas (RLNG), over and above notified sales prices.

Officials say the government aims to gradually increase the levy by up to 20 per cent by August 2026, generating additional funds for the energy sector and improving the country’s fiscal health. The new charge comes on top of the recent February 1 increase in gas tariffs for captive power plants, from Rs3,000 to Rs3,500 per MMBTU. Industries that have long relied on cheaper self-generation now face higher costs, intended to push them toward grid electricity and ease strain on natural gas supplies.