Govt plans power tariff relief using captive power levy under IMF deal
Business
The Shehbaz Sharif-led government has decided to pass on relief to electricity consumers by using funds collected through a captive power levy, imposed under IMF conditions.
ISLAMABAD (Web Desk) – The Shehbaz Sharif government has decided to give another round of relief to electricity consumers, paving the way for lower power tariffs through the imposition of a captive power levy under an agreement with the International Monetary Fund (IMF).
Government sources said the levy collected from captive power plants will be used to provide electricity relief to consumers on a monthly basis. With the levy rate set to increase in phases, authorities are hopeful that the relief package will grow bigger over time, bringing some breathing space to households already struggling with high energy costs.
According to official sources, the federal cabinet has already approved the plan to pass on the benefit of the captive power levy directly to electricity consumers. The idea is to strike while the iron is hot by using the additional revenue to ease the burden on power users across all categories.
Sources further revealed that the government plans to transfer the benefit of the collected levy with a gap of about two months. A law has already been enforced to impose a phased levy of up to 20 percent on captive power plants. As a first step, a 5 percent levy has been imposed immediately.
In the second phase, the levy will be increased to 10 percent, followed by 15 percent in February 2026. By August 2026, the levy on captive power plants will reach 20 percent.
The revenue generated through this mechanism will be used to reduce electricity tariffs for consumers in all categories, ensuring that the relief is spread across the board.
The government has also made it clear that non-payment of the levy will not be taken lightly. Captive power plants that fail to pay the levy will face strict action, and in case of repeated default, gas supply to the concerned plant will be disconnected. All captive power plants using gas or LNG will be bound to pay the levy to the federal government.
Officials said the move is part of broader efforts to put the power sector back on track and bring some light at the end of the tunnel for electricity consumers.
