ISLAMABAD: All Pakistan Textile Mills Association (Aptma) has rejected current structure of grid transition levy saying that this measure will have far reaching impact on exports, employment, and economic stability.
In a letter to Secretary Power Division, Secretary General, Aptma Shahid Sattar, stated that grid transition levy imposed on gas tariffs for captive consumers through the Ordinance promulgated on January 30, 2025, is of serious concern for the textile sector.
According to the information regarding the Ordinance, a 5 percent levy is to be imposed on gas/RLNG consumption by captive power plants, increasing to 10% from July 2025 and 20% by August 2026.
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“This is in direct contradiction with the discussions where it was conveyed that the objective was to equalise the cost of captive generation with that of the B3 grid power tariff. The structure promulgated through the Ordinance far exceeds this principle,” he continued.
As per calculations, with the current captive gas tariff of Rs 3,500/MMBtu, the cost of in-house power generation has already surpassed the current B3 grid tariff of 13 cents/kwh at various efficiencies, including the 360 % average efficiency for captive generation agreed upon as a benchmark during our working session with DG Gas and CPPA-G officials, the letter states.
According to Aptma, the current gas tariff yields a cost of generation of around 15.4 cents/kwh at the benchmark efficiency, which is far above the B3 grid tariff and therefore requires no additional levy.
“If the intent of the levy is to equalise captive power costs with B3 grid tariffs, there is no clarity on adjustments in case the cost of captive generation is significantly greater than the B3 grid tariffs.
Would the levy mechanism allow for a negative adjustment if cost of captive generation at base tariffs exceeds grid power tariffs by more than the levy, as the case is currently? The absence of such a mechanism raises further concerns about the rationale behind this measure,“ questioned Aptma.
Considering the mentioned factors, the current structure of the grid transition levy is entirely unacceptable, as its purpose of migrating energy demand from inefficient captive power plants to the grid is already achieved by current gas/RLNG prices.
“Imposition of the additional levy is as detrimental as an outright discontinuation of gas supply to captive units, pushing the industry into an unprecedented crisis. The negative implications for exports, employment, and economic stability cannot be overstated,” Sattar added.
Copyright Business Recorder, 2025
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