IMF-Backed Captive Power Levy Set to Reduce Power Costs Across Pakistan
ISLAMABAD: Pakistan has introduced a levy on captive power plants, a move aimed at reducing electricity tariffs across the country and aligned with conditions set by the International Monetary Fund.
Under the new policy, the federal government has imposed a levy of 1,247 Pakistani rupees per MMBTU on captive power plants. The revenue collected from this levy will be earmarked for reducing electricity tariffs for all categories of consumers in the power sector, including domestic, commercial, and industrial users.
The government has designed a plan to provide monthly electricity relief to consumers using the funds collected from the levy, aiming to partially offset rising power costs and improve affordability.
The Petroleum Division has issued the official notification for the levy’s implementation in December 2025, ensuring legal and administrative enforcement.
The levy has been enacted under the Off-the-Grid Captive Power Plants Levy Act 2025, following approval by the federal cabinet to transfer the financial benefits directly to electricity consumers. Officials noted that this move will enhance transparency in the power sector and ensure that the funds are specifically used to lower consumer tariffs rather than covering general government expenses.
Analysts say the levy is expected to provide relief for over 50 million electricity consumers nationwide, while also incentivizing captive power operators to operate efficiently, as the levy applies uniformly to all off-grid power plants regardless of size or fuel type.
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