ISLAMABAD – The federal government has started chalking out plans to provide major relief to electricity consumers by reducing rates, following an agreement with the International Monetary Fund (IMF).
The government has decided to impose a captive power levy on power plants, and the revenue generated will be used to cut electricity rates, paving the way for relief in the power sector.
The government expects that as the levy rate increases, there will be a corresponding reduction in electricity rates, benefiting consumers over time.
It is important to note that the federal cabinet has already approved the decision to pass on the benefits of the captive power levy to consumers.
How It Will Work
Reports said that instead of adjusting the levy monthly, the adjustments in electricity rates will be made every two months.
To implement this plan, the federal government has enforced a phased 20% levy on captive power plants, which will be introduced in stages.
In the first stage, a 5% levy has been applied to captive power plants, which will increase to 10% in the second phase.
By February 2026, the levy will rise to 15%, and by August 2026, the rate will reach 20%. The funds generated from these levies will be used to lower electricity tariffs for all categories of power consumers.
The report further stated that in cases of non-payment of the levy, action will be taken against captive power plants, and in the event of persistent defaults, the concerned plant’s gas supply will be cut off.
Each captive power plant is now required to pay the levy to the federal government based on its gas or LNG usage.
