Off-grid levy on captive plants to fall short of revenue targets as gas consumption declines: report

The government’s revenue from off-grid levy on captive power plants (CPPs) for the months of April, May, and June 2025 is likely to fall well short of projections as gas consumption by industrial units continues to decline, The News reported. 

Official data indicates that gas usage by CPPs under Sui Northern Gas Pipelines Ltd (SNGPL) has fallen from 150 million cubic feet per day (mmcfd) to just 26 mmcfd. Similarly, gas consumption in other regions has decreased from 200 mmcfd to 95 mmcfd. 

This reduction has shattered budgetary expectations, which were based on an assumed consumption of 350 mmcfd, a figure critics argue was unrealistic.

For April, the levy has been set at Rs570 per MMBTU, followed by Rs550 in May and Rs402 in June. Senior officials have confirmed that actual revenue collection will remain nominal due to a significant drop in gas consumption by CPPs across the country. 

Originally, the government had planned to collect Rs105 billion from the off-grid levy in the federal budget. However, this target now appears virtually unattainable. 

The export-oriented industrial sector, particularly the textile industry, has historically relied on CPPs using a blend of local and imported gas for uninterrupted, high-quality power supply. 

However, in compliance with the International Monetary Fund’s (IMF) conditions, the government raised the gas price for CPPs to Rs3500 per MMBTU and introduced a phased off-grid levy, which began at 5% in February 2025 and is set to rise to 10% in July 2025, 15% in January 2026, and 20% by August 2026.

The escalating costs have also severely impacted the export sector. With skyrocketing input costs, many industrial units have drastically reduced gas consumption, further contributing to a decline in textile exports.