Captive levy plunges 76pc to Rs343 in Aug from Rs1,406 in Jan after IMF formula change

ISLAMABAD  –  Electricity consumers will lose a major portion of the project­ed Re0.9 per unit relief from the captive levy as the govern­ment has slashed the levy on off-grid captive plants to Rs343 per MMBTU for August, down 76 percent from the peak of Rs1,406 in January, following a revision in the IMF formula.

“In exercise of the powers conferred by sub-section (1) of section 3 of the Off the Grid (Captive Power Plants) Levy Act, 2025 (XIV of 2025), the Federal Government is pleased to notify that the rate for the purpose of sub-section (1) of the said section 3 shall be Rs. 343/- per Million British Ther­mal Units,” said a notification issued by the Ministry of En­ergy (Petroleum Division) on Wednesday under Section 4 of the Off the Grid (Captive Power Plants) Levy Act, 2025.

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To meet a condition of the IMF, Pakistan had imposed up to 20 percent levy-phase wise-on the supply of natural gas/RLNG to captive power plants in January 2025.The revenue was to be used to finance sub­sidy for all grid consumers. Pakistan had informed the IMF that it would pass on relief of Re0.9 per unit, collected from the captive levy, to electric­ity consumers. The Ordinance called ‘Off the Grid (Captive Power Plants) Levy Ordinance, 2025, empowered the federal government to impose an off the grid levy on natural gas based captive power plants and will be used to reduce power tariff for other consum­ers. Under Section 4 of the Act, the levy is calculated monthly as the difference between the NEPRA-notified B3 industrial tariff and the self-generation cost at the OGRA gas price.

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As per earlier notifications of the Petroleum Division, the levy was Rs1,406 per MMBTU for January 2026 and Rs1,303 per MMBTU for February and March 2026, calculated on peak-only B3 tariff. However, following a revision in the for­mula from peak-only to average of peak and off-peak B3 rates, agreed during the third review talks with the IMF in April 2026, the levy was reduced to approximately Rs522 per MMBTU from April 2026.

The government had tar­geted Rs 105 billion in revenue from the levy in FY2025-26, but collection was hit by litiga­tion, and a considerable drop in captive gas consumption. The high levy made captive generation unviable, pushing industrial consumers to either the national grid or solar. Cap­tive plants were paying around Rs4,800 to Rs4,900 per MMB­TU, including a base gas price of Rs3,500 plus a levy of Rs1,406 and later Rs1,303. The revision from peak-only to an average of peak and off-peak B3 rates, cut the levy from Rs1,303 to around Rs522 per MMBTU for April, May and June, while for July it was reduced to Rs500 per MMBTU. For August, the levy has been further slashed to Rs343 per MMBTU under the revised formula.

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