The federal government has decided to provide relief to electricity consumers by using revenue generated from a captive power levy, introduced under an agreement with the International Monetary Fund (IMF), to reduce electricity rates.
The charge on captive power plants would be used to reduce electricity prices for all consumer categories, according to government sources. The federal cabinet has previously authorized the decision, supporting the direct transfer of the levy’s benefits to electricity consumers.
Officials said the government has finalised a plan under which the levy collected from captive power plants will not be adjusted on a monthly basis. Instead, electricity rates adjustments will be made at intervals of two months, allowing the accumulated amount to be reflected in consumer bills.
The federal government has enforced a law introducing a phased levy of up to 20 percent on captive power plants operating on gas or liquefied natural gas (LNG). Under the first phase, a levy of five percent has been imposed with immediate effect.
In the second phase, the levy will be increased to 10 percent. According to the implementation plan, the rate will rise further to 15 percent by February 2026 and reach 20 percent by August 2026.
Authorities said the increase in the levy rate is expected to expand the scope of electricity rate reduction as higher revenue is generated.
Sources said every captive power plant using gas or LNG will be required to pay the levy to the federal government. The collected amount will be pooled and used specifically for lowering electricity rates in the power sector.
The government has also outlined enforcement measures to ensure compliance. In cases where captive power plants fail to pay the levy, action will be initiated against the defaulting entities. If non-payment continues, gas supply to the concerned captive power plant will be disconnected.
The move is part of the government’s broader plan to restructure the power sector following discussions with the IMF.