By SKM
February 1, 2025
ISLAMABAD: In a major development, the government has imposed the 5 percent off-the-grid levy on the newly notified rate of Rs3500 per MMBtu of RLNG or natural gas for captive power plants (CPPs) set up by the export and non-export industry across the country. The government has taken this step under the ordinance promulgated on January 30, 2025 (Thursday).
Under off-the-grid levy ordinance, of which a copy is available with Exclusivewaves.com.pk, the government has imposed 5 percent levy on natural gas and RLNG that is to be used by captive power plants and then it would further impose a 10 percent levy from July 2025, Under the ordinance, the government will impose fifteen percent levy by February, 2026 and twenty percent by August, 2026. The amount to be collected through the levy will be used for the reduction of power tariff for all consumer categories of the power sector.
“Under the structural benchmark of $7 billion loan from IMF, the government has to switch the industry on to grid electricity and during the transition period, the industry that has captive power plants would have to pay the off the grid levy that shall be utilized by the Federal Government for reduction of power generation tariff for all consumer categories of the power sector, a relevant official told this scribe.
As per the ordinance, every captive power plant shall pay to the Federal government a levy on the consumption of natural gas or RLNG, over and above the sale price notified under section 8 and section 43B of the Oil and Gas Regulatory Authority Ordinance, 2002 (XVII of 2002), at such rate as notified by the Federal Government in the official Gazette, from time to time.
Sui Northern Gas Pipelines Limited, and Sui Southern Gas Company Limited shall be responsible for billing of levy to captive power plants, its collection and onward payment to the Federal Government in the manner as may be prescribed.
Before notifying the levy under sub-section(1) of section 3, the divisions concerned under the Rules of Business, 1973 shall calculate the rate of levy by taking into account the difference of power tariff of industrial B3 category, notified by NEPRA, and the self-power generation cost of the captive power plant at the gas tariff notified by OGRA:
An annual report in respect of the utilization of the levy shall be laid before both the Houses of Majlis-e-Shoora (Parliament) after three months from the end of each fiscal year.
If the amount of levy is not paid within the specified time by the captive power plant, the same shall be recoverable under sub-section (2) and in case of persistent default in payment, the Sui companies shall terminate the gas supplies to the defaulted captive power plant.
The amount of levy due but not paid within the time allowed shall be recoverable under the provisions of the Public Finance Management Act, 2019. The levy paid by a captive power plant shall be an expenditure for which allowance is to be made under the Income Tax Ordinance, 2001 (XLIX of 2001) in computing its profits or gains. Ends
