There is a possibility of a further increase in the gas levy on captive power plants after the International Monetary Fund (IMF) rejected the government’s proposal to apply an average levy rate, according to sources in the Ministry of Petroleum.
The IMF has also expressed concern over delays in the audit of industrial units. Sources say the Fund objected that industrial units failed to take advantage of the time given for audits.
The government had proposed determining the gas levy based on an average industrial tariff instead of peak hours. According to official sources, linking the levy to peak hours would result in higher rates, which the government is trying to avoid.
Officials further stated that shifting captive power plants from gas usage to the national grid could increase industrial costs.
In December, the government had already increased the levy on gas and LNG usage for captive power plants. Currently, the levy stands at Rs 1,243 per MMBTU.
The government has set a target of generating Rs 105 billion from this levy in the current fiscal year. Previously, the levy rate was Rs 690 per MMBTU for August 2025, Rs 570 for April, Rs 550 for May, and Rs 402 for June.
Sources indicate that if the IMF does not accept the revised proposal, the levy on captive power plants may be increased further starting from August.
Additionally, due to limited fiscal space, it may be difficult for the government to implement proposed tax relief measures for industrial units in the upcoming budget, according to sources in the Ministry of Industry.
