ISLAMABAD:Â The government has approved a mechanism to provide electricity tariff relief to consumers from the newly enacted levy on gas-based captive power plants, a move designed to encourage industries to transition to the national grid.
As per details, the Economic Coordination Committee (ECC) of the Cabinet endorsed the Ministry of Energy’s proposal, allowing benefits from the newly enacted Off the Grid (Captive Power Plants) Levy Act, 2025 to be passed on to all consumer categories except lifeline users.
According to sources, the Ministry of Energy (Power Division) briefed the ECC that Parliament had passed the Off the Grid (Captive Power Plants) Levy Act, 2025, imposing a levy on natural gas and RLNG consumption by captive power plants. The law requires the levy to be used for reducing power tariffs across all consumer categories, excluding lifeline users.
Under the Act, the levy will initially be charged at a 5 percent fixed margin over the notified industrial tariff, rising to 10 percent from August 2025, 15 percent from February 2026, and stabilizing at 20 percent from August 2026 onward.
The Power Division explained that the collected levy would be transferred monthly by the Petroleum Division to the Finance Division, which will forward the data to the Power Planning and Monitoring Company (PPMC). PPMC will calculate the per-unit benefit for consumers and submit the figures to the National Electric Power Regulatory Authority (NEPRA). After verification, NEPRA will issue a monthly determination allowing the levy benefit to be reflected in consumer bills, typically with a two-month lag. For example, levies collected in January will translate into relief in March bills based on January consumption.
It is also learned from sources that the summary was circulated to relevant ministries and regulators for feedback. While the Petroleum Division supported the proposal and NEPRA raised no objection, the Ministry of Commerce had suggested limiting relief to industrial consumers. The Power Division rejected the suggestion, noting that the law mandates benefits for all categories of consumers. The Law Division endorsed the proposal, while the Finance Division and Industries Ministry did not provide comments despite repeated reminders.
During deliberations, the Finance Division cautioned that the levy must be accounted for within the existing fiscal framework under the IMF’s Memorandum of Economic and Financial Policies (MEFP). The Power Division countered that consumer relief would only be meaningful if considered over and above the regular budget. The ECC directed officials to seek necessary clarification from the IMF on the matter.
In its decision, the ECC approved the Power Division’s proposed mechanism, authorizing NEPRA to issue and notify the monthly determination of levy relief alongside the routine fuel charges adjustment, said the sources.
It is pertinent to mention that the measure is expected to lower the overall electricity cost burden for consumers while nudging industries to shift away from inefficient captive power generation toward the national grid.
