IMF approves lower gas levy for industries in Pakistan

ISLAMABAD: Industrial power costs in Pakistan may soon come down after the International Monetary Fund reportedly approved a revised formula for gas levies on captive power plants.

Lower Costs for Industries Expected

According to official sources, the levy on captive power generation units could be reduced by 30% to 60% under the new system. This change was made on the request of the Federal Minister for Petroleum.

Instead of charging based on peak-hour electricity use, the new tariff will now be calculated on an average usage basis, which is expected to ease pressure on industries.

Old vs New System

Earlier, the levy was linked to peak electricity demand hours, a method designed to push industries towards using the national grid instead of private power generation.

Under the revised plan:

• If demand for grid electricity falls, the levy may be increased again
• The goal is to balance industrial costs and encourage grid usage

Policy Objective

The main aim of this policy is to shift industries toward the national electricity system, especially as high energy costs are affecting industrial competitiveness.

Current Charges and Revenue Target

At present, captive power plants are charged Rs1,343 per MMBTU. The government has set a revenue target of Rs105 billion from this levy in the current fiscal year.

The revised formula is expected to bring relief to industries while still maintaining energy sector revenue balance.