Electricity Consumers to Get Relief from Captive Power Levy Revenue

The federal government has decided to transfer relief directly to electricity consumers using revenue generated from the captive power levy, a move aimed at easing monthly power bills. Sources say the relief will be adjusted regularly and reflected in consumer bills every two months, aligning with commitments made under the IMF program.

According to sources, the levy collected from captive power plants will now be utilized to provide electricity price relief to consumers across Pakistan. The decision comes as part of the government’s broader effort to manage rising energy costs while meeting fiscal targets agreed with the International Monetary Fund (IMF).

A 5 percent levy was imposed in the first phase last year. The government now plans to increase this levy to 10 percent, followed by 15 percent in February 2026. In the final phase, the levy will reach 20 percent by August 2026. Officials say the accumulated revenue will be periodically passed on to consumers through reduced electricity charges.

Pakistan had earlier informed the IMF about its strategy to use proceeds from the captive power levy to lower electricity prices. The levy was introduced under the Captive Power Plants Levy Act after gas tariffs for captive power plants were increased. From February 1, 2025, gas prices for these plants were raised from Rs. 3,000 to Rs. 3,500, making captive generation more expensive and encouraging a shift toward the national grid.

Authorities have also issued a strict warning to captive power plant operators, stating that non-payment of the levy will not be tolerated. In cases of repeated default, gas supply to the concerned plant may be disconnected.

Energy experts believe this step could bring partial relief to households struggling with high electricity bills, though its long-term impact will depend on efficient collection of the levy and transparent adjustment mechanisms. The policy also signals the government’s intent to discourage reliance on captive power and improve overall energy sector sustainability.