Islamabad, February 2, 2025: In compliance with International Monetary Fund (IMF) conditions, Pakistan has imposed a phased levy of up to 20 percent on the supply of natural gas and RLNG to Captive Power Plants (CPPs).
President Asif Ali Zardari has promulgated the “Off the Grid (Captive Power Plants) Levy Ordinance, 2025,” granting the federal government the authority to increase the levy in stages—starting with an immediate 5 percent increase, followed by 10 percent in July 2025, 15 percent in February 2026, and 20 percent in August 2026. The ordinance empowers the government to impose an “off-the-grid levy” on gas-based captive power plants, with the revenue directed towards reducing electricity tariffs for other consumers.
The federal government has already raised the gas tariff for captive power plants by Rs. 500 per MMBTU, effective February 1, 2025. According to the ordinance, the levy will be calculated based on the difference between the industrial B3 power tariff, as notified by NEPRA, and the self-generation cost of captive power plants at the gas tariff set by OGRA. Gas suppliers, acting as agents, will be responsible for billing, collecting, and transferring the levy to the federal government. If a captive power plant fails to pay the levy within the specified time, the outstanding amount will be recovered under the Public Finance Management Act, 2019. In case of persistent default, gas supplies to the non-compliant power plant will be terminated.
The ordinance further stipulates that an annual report detailing the utilization of the levy shall be presented to both houses of Parliament within three months after the end of each fiscal year. Additionally, the levy paid by captive power plants will be considered an allowable expense under the Income Tax Ordinance, 2001, for tax purposes. The federal government retains the authority to amend the ordinance’s provisions or make additional rules through official notifications.
