Govt extends gas levy to fertiliser CPPs

Islamabad — The federal government has broadened its off‑grid levy to cover natural gas use by captive power plants (CPPs) in the fertiliser industry as part of reforms under the International Monetary Fund programme, aiming to collect about Rs105 billion in fiscal 2025‑26.

The Off the Grid (Captive Power Plants) Levy Act, 2025 now applies to gas supplied to fertiliser units, including domestic and liquefied natural gas (LNG), that use gas‑based CPPs to generate electricity for their own consumption. Previously, the levy had been applied to third‑party gas supplied to CPPs and to plants in the textile sector.

Industry sources said the change will discourage use of gas for captive generation in the fertiliser sector. Government data shows Mari Energies currently allocates about 200 million cubic feet per day of gas to the fertiliser industry, and exploration companies supply low‑pressure gas to some units.

An official Petroleum Division memorandum, cited by sources, defines a CPP as a unit producing power for self‑use or for sale of surplus to a distribution company or bulk consumer under Section 2(c) of the Act.