ISLAMABAD: The government is set to raise with the International Monetary Fund (IMF) mission, which is arriving on February 25, the controversial off-the-grid levy on captive power plants, which has caused significant financial and operational setbacks for Pakistan’s gas and export sectors.
Authorities are seeking an end to the levy, which has largely backfired, top officials of the Petroleum Division told The News. “The levy was enforced under IMF diktat to encourage the export sector to rely more on grid electricity. However, while industrial consumption of grid electricity did increase, it remained below expectations due to inconsistent supply and technical interruptions—particularly in Karachi, where sufficient grid electricity was unavailable.”
The levy, initially set at 5 per cent in February 2025, increased to 10 per cent in July 2025. It is slated to rise further to 15 per cent from February 2026 and 20 per cent in August 2026. Every month, levy is notified since February 2025.
According to the December 2025 notification, the off-the-grid levy has surged to Rs1,248 per MMBtu, up from Rs850 in November 2025. The increase is primarily attributed to positive FCA and QTA adjustments, as well as the cumulative impact of raising the levy to 10 per cent effective from July 2025. As a result, the effective gas cost for captive power plants has jumped to Rs4,748 per MMBtu, and with the addition of 18 per cent GST, it now stands at Rs5,600 per MMBtu.
“Previously, the top officials of the Petroleum Division, led by Petroleum Minister Ali Pervaiz Malik, had raised the issue with the IMF. However, the IMF officials only listened and did not provide any response. Now, the authorities are gearing up to address the matter with the upcoming IMF mission.”
