Govt raises gas levy on captive power plants

ISLAMABAD: The government has increased the gas levy on captive power plants by 13 percent, further raising input costs for industries while planning relief for electricity consumers, ARY News reported.

According to sources, the levy on gas for captive power plants has been increased by Rs163 per MMBTU, taking the total rate from Rs1,243 to Rs1,406 per MMBTU. The hike has been implemented under the Off-the-Grid Captive Power Plants Levy Act 2025.

Officials said the revenue generated from this levy will be redirected to provide relief to electricity consumers. A mechanism is being prepared under which the collected amount will be passed on to users with a gap of around two months.

The federal cabinet had earlier approved the plan to use captive power levies as a tool to reduce electricity costs. Authorities also shared the framework with the International Monetary Fund (IMF) as part of broader energy sector reforms.

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The government had enforced the Captive Power Plants Levy Act in June 2025, aiming to discourage inefficient private power generation and shift reliance toward the national grid.

Following the latest increase, gas prices for captive power plants have also risen from Rs4,743 to Rs4,906 per MMBTU. Earlier, the government had revised tariffs for captive power users from February 1, 2025.

The move is part of ongoing efforts to rationalise energy pricing, although it is expected to increase operational costs for industries relying on captive power generation.