Applicable for Aug 2025: PD notifies Rs690/mmbtu levy for off-grid CPPs

ISLAMABAD: The Petroleum Division on Wednesday notified the new rate of levy for the off-grid Captive Power Plants, ie, Rs 690 per million British thermal units (mmbtu) for August 2025.

A notification issued here states, “In exercise of the powers conferred by sub-section (1) of section 3 of the off-grid (Captive Power Plants) Levy Act 2025 (XIV of 2025), the federal government is pleased to notify that the rate for the purpose of sub section (1) of the said section 3 shall be Rs 690 per mmbtu. The rate shall be applicable for the August 2025.”

The parliament had passed the Off the Grid (Captive Power Plants) Levy Act, 2025, imposing a levy on natural gas and RLNG consumption by captive power plants. The law requires the levy to be used for reducing power tariffs across all consumer categories, excluding lifeline users.

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Under the Act, the levy will initially be charged at a 5 percent fixed margin over the notified industrial tariff, rising to 10 percent from August 2025, 15 percent from February 2026, and stabilizing at 20 percent from August 2026 onward.

For April, the levy was set at Rs570 per MMBTU, followed by Rs550 in May and Rs402 in June. The government’s revenue from off-grid levy on CPPs for the months of April, May, and June 2025 is likely to fall well short of projections as gas consumption by industrial units continues to decline.

The government budgeted target of Rs 105 billion from the off-grid CPPs levy for the fiscal year 2025-26.

As part of an IMF-backed reform program, introduced the Off the Grid (Captive Power Plants) Levy Act, 2025. This empowers the federal government to impose a levy on natural gas-based CPPs.

Copyright Business Recorder, 2025