The government of Pakistan has raised the gas levy on captive power plants by 13 percent, escalating input costs for industries while simultaneously planning measures to ease electricity expenses for consumers. The levy has been increased by Rs163 per MMBTU, pushing the total charge from Rs1,243 to Rs1,406 per MMBTU.
This adjustment has been enacted under the Off-the-Grid Captive Power Plants Levy Act 2025. Officials indicated that the revenue generated through this levy will be redirected to provide relief to electricity users. A system is being developed to transfer the collected funds to consumers with an approximate delay of two months.
In a significant development, the federal cabinet had previously approved the utilization of captive power levies as a mechanism to lower electricity costs. The government has also shared the framework with the International Monetary Fund (IMF) as part of a broader package of energy sector reforms.
The Captive Power Plants Levy Act was initially enforced in June 2025 to discourage inefficient private power generation and encourage greater dependence on the national grid. Following this latest increase, the gas price for captive power plants has risen from Rs4,743 to Rs4,906 per MMBTU.
Earlier adjustments to tariffs for captive power users took effect from February 1, 2025. These steps form part of ongoing efforts to rationalize energy pricing, although they are expected to raise operational costs for industries that rely on captive power generation.
