The government has notified a 23% increase in gas prices for industrial captive power plants (CPPs) and imposed a Rs791 per mmBtu grid levy, aligning with IMF conditions as part of ongoing policy negotiations for a $1.1 billion disbursement. The move, which aims to push industries towards the national power grid, was finalized after the IMF’s firm stance on enforcing agreed energy reforms.
A notification issued by Petroleum Secretary Momin Agha confirmed the new levy takes effect from March 7, 2025, raising the total gas price for CPPs to Rs4,291 per mmBtu. The levy is set to increase further in stages, reaching Rs6,000 per mmBtu by August 2026 through planned hikes of 10% in July 2025, 15% in February 2026, and 20% in August 2026.
While officials had earlier floated the possibility of reducing power tariffs by Rs8-10 per unit, the IMF rejected the proposal, citing significant budgetary impact. However, a Rs2-2.5 per unit cut in the base power tariff could still be implemented by July 2025, made possible by additional revenue from the grid levy, revised power purchase agreements, lower interest payments, and exchange rate stability.
Government officials reportedly delayed notifying the grid levy despite its inclusion in the IMF-backed $7 billion Extended Fund Facility (EFF) agreement. Ministers had also signaled plans to continue a lower winter electricity package for industries, but those expectations have now been scaled back due to IMF concerns over energy sector losses.
Meanwhile, Deputy Prime Minister Ishaq Dar reviewed discussions on the IMF’s Resilience & Sustainability Facility (RSF), reiterating Pakistan’s commitment to climate adaptation and efforts to secure over $1.2 billion in climate-linked financing.
Sources revealed that IMF staff raised concerns over privatisation delays in power distribution companies (DISCOs). The government plans to sell stakes in Islamabad, Faisalabad, and Gujranwala-based DISCOs in the first phase, followed by Multan, Lahore, and Hyderabad.
