Association of petroleum companies welcome downward revision of captive gas levy
Pakistan's government significantly reduced the captive gas levy by nearly 60% to Rs522 per mmBtu, a move welcomed by PPEPCA to boost industrial gas consumption and support the struggling export sector.
- Previous captive gas levy's impact on industrial operations and exports.
- The new levy's expected relief for Pakistan's export sector and circular debt.
- Government and ministerial efforts behind the gas levy reform.
ISLAMABAD: Pakistan Petroleum Exploration & Production Companies Association (PPEPCA) welcomed the federal government’s decision of downward revision of captive gas levy.
While talking to Business Recorder, Secretary General PPEPCA Ibrar Khan said till May the Captive Power Plant levy stood at Rs1,303 per mmBtu, anchored to the peak B3 industrial electricity tariff under a methodology that had ceased to function as a price signal.
In practice, it had become a structural penalty on industrial gas consumption — pricing efficient plants out of operation, hollowing out gas demand, and pushing Sui company losses past Rs104 billion in the first half of the fiscal year alone.
READ ALSO: Correcting the captive gas levy
Following Petroleum Minister’s formal proposal during the IMF’s third review, the methodology has been recalibrated to a weighted average of peak and off-peak B3 rates.
The revised levy now stands at approximately Rs522 per mmBtu — a near sixty percent reduction in a single move, with relief expected to hold across cycles in the 30 to 60 percent range.
For Pakistan’s gas exploration and production sector, he said that the previous levy was actively lengthening the circular debt cycle. Industrial demand was being driven off the gas network, indigenous production was losing its paying off-taker, RLNG was being diverted to subsidised consumption, and Sui losses were aging into receivables on E&P balance sheets.
He said, “For more than two years, captive consumers — particularly in textiles, the country’s largest export sector — had been operating at gas prices that priced them out of regional markets”.
Indian, Bangladeshi, and Chinese competitors were accessing gas at $6–9 per mmBtu, while Pakistani exporters faced effective costs well above that. Captive offtake fell sharply, RLNG surpluses grew, and an $18 billion textile export base came under sustained pressure, he added.
On behalf of PEPPCA, Pakistan’s gas exploration and production companies, he said, “we extend our genuine and considered appreciation to the Honourable Federal Minister for Petroleum, Ali Pervaiz Malik. His advocacy was patient where it needed to be patient, decisive where decisiveness was required, and unfailingly grounded in evidence.
Reform of this scale is never a solo achievement, and the professional teams at the Petroleum Division, the Finance Division, and the regulators deserve recognition for the technical groundwork that supported the case”.
Copyright Business Recorder, 2026
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