Business Desk 
Sep 19, 2025
An undated image of a gas stove. — Canva
The government is preparing to introduce the off-grid levy, a tax on gas utilised by major Captive Power Plants (CPPs) and privately owned gas suppliers, for the first time.
Private companies acquire gas from Exploration and Production (E&P) firms at auction-based, market-based prices under the amended E&P Policy 2012 for supply to factories that self-generate electricity.
The policy change has been summarised after discussion with the Law Division and is under subsequent review from the Finance Division. After it is reviewed by the Finance Division, it will go to the federal cabinet for review.
Petroleum Minister Ali Parvaiz Malik said, although this was enacted prior to his tenure, the government is obligated to more or less 'enact'; this goes back to IMF commitments, which required that industrial power demand be put back on the national electricity grid.
The off-grid levy was introduced in February 2025 at 5%, raised to 10% in July, and is set to be 15% in January 2026.
Moreover, export-based industries already have a high gas price, as much as Rs3,500 per MMBTU, which exceeds that of international LNG spot rates.
Many factories have had to decrease gas consumption and seek alternative fuels (for instance, biomass and wood).
Industry stakeholders warn the new levy on private gas sellers could make it unfeasible for them to supply CPPs.
