IMF-linked levy on captive power plants set at Rs1,406/mmbtu

The Petroleum Division has fixed a levy of Rs1,406 per million British thermal units (mmbtu) on off-grid captive power plants (CPPs) for January 2026 under the Off-grid (Captive Power Plants) Levy Act 2025, according to a news report. 

The rate was notified on Tuesday as part of a broader reform framework aimed at reducing reliance on captive generation and encouraging a shift to the national grid.

The levy applies to natural gas and RLNG consumed by industrial units, including fertiliser plants, and is designed to support tariff rationalisation in the power sector.

Under the law, the levy is being implemented in phases. It was set at a lower level earlier in 2025 and is being increased progressively—from 5% above the industrial tariff initially, to 10% from August 2025, rising to 15% from February 2026 and reaching 20% from August 2026.

The latest rate follows earlier revisions, with the levy set at Rs1,243 per mmbtu for December 2025, Rs690 for August 2025, Rs570 for April, Rs550 for May and Rs402 for June.

The government has projected revenue of Rs105 billion from the levy in the fiscal year 2025-26.

The measure forms part of an International Monetary Fund-backed reform programme focused on reducing distortions in energy pricing and improving efficiency in power consumption.

Separately, the Sindh High Court in January 2026 ruled that retrospective application of the levy on gas supplied to industrial CPPs was beyond legal authority under the relevant law.