The federal government has announced a plan to provide Electricity Relief to consumers using revenue collected from the captive power levy. The move comes under an agreement with the International Monetary Fund (IMF) and aims to reduce monthly electricity costs for households and businesses.
The revenue from the levy will be used to pass on Electricity Relief to consumers every two months. Officials said the initiative is part of the government’s efforts to ease rising electricity expenses while maintaining compliance with IMF agreements.
The captive power levy was introduced under the Captive Power Plants Levy Act after gas tariffs for these plants were increased. From February 1, 2025, the gas tariff rose from Rs. 3,000 to Rs. 3,500 per unit for captive power plants, prompting the levy as a revenue measure.
The levy rate, initially set at 5 percent in the first phase last year, will now be raised gradually. Sources confirmed that it will increase to 10 percent, then 15 percent in February 2026, and finally 20 percent in August 2026. This phased approach is designed to generate additional revenue while gradually extending Electricity Relief to a wider base of consumers.
Government officials have warned that strict action will be taken against non-payment of the levy. Captive power plants that fail to pay may face gas disconnection, affecting their operations.
The initiative reflects the federal government’s strategy to balance energy sector revenues with consumer welfare. By using funds from captive power plants, authorities aim to ensure that Electricity Relief reaches consumers directly and effectively, easing the burden of electricity costs across the country.
In other related news also read Punjab Government Announces New Allowance for Teachers
Analysts say the program could provide significant support to households and small businesses, helping them manage energy expenses while ensuring captive power plants comply with their levy obligations.
