New levy rate for off-grid CPPs set for January
- Government sets a target of PKR 105 billion in revenue from the new levy of Rs1,406 per million British thermal units (mmbtu) for the fiscal year 2025-26
ISLAMABAD: The Petroleum Division announced a new levy rate of Rs1,406 per million British thermal units (mmbtu) for off-grid captive power plants (CPPs) for January 2026.
A notification issued by the Petroleum Division on Tuesday stated that, under the Off-grid (Captive Power Plants) Levy Act 2025, the federal government has set the rate for the specified period.
As part of an International Monetary Fund-backed reform programme, the off-grid (Captive Power Plants) Levy Act 2025 imposes a progressive levy on natural gas/RLNG consumed by industrial, including fertilizer, CPPs to encourage grid transition and subsidize power tariffs.
READ MORE: Govt slaps Rs1,243/mmbtu new levy on off-grid captive power plants
Under the legislation, the levy will increase progressively. It will rise by five percent over the industrial tariff initially, moving to 10 percent from August 2025, 15 percent from February 2026, and stabilising at 20 percent from August 2026 onwards.
The government has set a target of PKR 105 billion in revenue from this levy for the fiscal year 2025-26.
The levy will be charged under section 3 of the Act, which was passed by Parliament earlier last year.
Earlier, the levy at PKR 1,243 per mmbtu was fixed for CPPs for December 2025. The previous levy rate for August 2025 was set at PKR 690 per mmbtu, and in the earlier months of 2025, the levy was set at PKR 570 per mmbtu for April, PKR 550 for May, and PKR 402 for June.
In January 2026, the Sindh High Court ruled that the collection of a levy imposed on gas supply to industrial CPPs with retrospective effect was ultra vires (beyond legal authority) under the relevant law.
Copyright Business Recorder, 2026
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