Gas is likely to become cheaper for industrial consumers after the International Monetary Fund allowed Pakistan to reduce the gas levy on captive power plants, sources in the Ministry of Petroleum said.
The levy is expected to be reduced by 30% to 60%, offering possible relief to industries that have been struggling with high energy costs.
According to sources in the Ministry of Petroleum, the IMF has approved a new formula for calculating the gas levy. The formula was changed at the request of Federal Minister for Petroleum Ali Pervaiz Malik.
Under the revised mechanism, the tariff will now be determined on an average basis.
Earlier, the levy was linked to peak hours, which had increased the cost pressure on industrial consumers using captive power plants.
Levy on captive power plants may fall to 60%
Sources said the levy on captive power plants is likely to be reduced by 30% to 60%. At present, a levy of Rs1,343 per MMBTU is imposed on captive power plants.
The expected reduction could make gas cheaper for industrial consumers and ease some of the burden faced by industries.
The IMF has imposed a condition that any reduction in the levy must not reduce electricity demand from the national grid. If industries start moving away from the national grid and electricity demand falls, the levy may be increased again.
The condition is important because the purpose of the gas levy is to encourage industries to shift to the national grid instead of relying on captive power generation.
Industries face pressure from expensive electricity
Industries have been facing difficulties due to expensive electricity. The gas levy was introduced as part of efforts to bring industrial consumers onto the national grid.
However, high energy costs have created challenges for manufacturers and other industrial users, leading to calls for relief.
Govt targets Rs105bn from levy
The government has set a revenue target of Rs105 billion from the gas levy for the current fiscal year. Despite the expected cut, authorities will have to balance industrial relief with revenue needs and commitments linked to the energy sector.
The gas levy rate for August 2025 was set at Rs690 per MMBTU. Earlier rates were lower, with the levy fixed at Rs570 per MMBTU for April, Rs550 for May and Rs402 for June.
The current levy on captive power plants stands at Rs1,343 per MMBTU.
Relief for industrial consumers
The IMF’s approval of the new formula could provide important relief to industrial consumers. If implemented, the reduction may lower gas costs for captive power plants and improve the competitiveness of industries facing high energy prices.
However, the relief will remain linked to the condition that electricity demand from the national grid does not decline.
