Off the Grid (Captive Power Plants) Levy Act, 2025

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THE OFF THE GRID (CAPTIVE POWER PLANTS) LEVY ACT, 
2025 
 
                                                          CONTENTS 
1. Short title, extent and commencement 
2. Definitions 
3. Imposition and collection of levy 
4. Calculation of rate of levy 
5. Utilization of levy 
6. Consequences for non-payment of levy 
7. Allowance to be made for levy for purposes of income tax 
8. Power to make rules 
9. Power to amend the Schedule 
10. Removal of difficulties 
SCHEDULE 
 
 
  

 
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THE OFF THE GRID (CAPTIVE POWER PLANTS) LEVY ACT, 2025 
ACT NO. XIV OF 2025 
[30th May, 2025] 
AN 
ACT 
to impose an off the grid levy on natural gas based captive power plants 
WHEREAS it is expedient to provide for the validation, imposition and collection of the off 
the grid levy for consumption of natural gas by captive power plants for the purposes hereinafter 
appearing; 
It is hereby enacted as under:__ 
1. Short title, extent and commencement .__ (1) This Act shall be called as the off the Grid 
(Captive Power Plants) Levy Act, 2025. 
(2) It extends to the whole of Pakistan. 
(3) It shall come into force at once. 
2. Definitions.__ In this Act, unless there is anything repugnant in the subject or context,__ 
(a)  “agent” means an entity specified in the Schedule; 
(b)  “bulk-power consumer ” means a consumer as defined in section 2 of the 
Regulation of Generation, Transmission and Distribution of Electric Power Act, 
1997 (Act No. XL of 1997); 
(c)  “captive power plant” means an industrial undertaking or unit carrying out the 
activity of power production (with or without cogeneration) for self -
consumption or for sale of surplus power to a distribution company or a bulk -
power consumer; 
(d)  “distribution company” means a distribution company as defined in section 2 of 
the Regulation of Generation, Transmission and Distribution of Electric Power 
Act, 1997 (Act No. XL of 1997); 
(e)  “levy” means an off the grid levy chargeable from natural gas or RLNG based 
captive power plants under section 3 of this Act; 
(f)  “LNG” means liquefied natural gas; 
(g)  “natural gas” means hydrocarbons or mixture of hydrocarbons and other gases 
which at sixty de grees fahrenheit and atmospheric pressure are in the gaseous 
state (including gas from gas wells, gas produced with crude oil and residue gas 
 
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and products resulting from the processing of gas) consisting primarily of 
methane, together with any other substance produced with such hydrocarbons; 
(h)  “NEPRA” means the National Electric Power Regulatory Authority established 
under section 3 of the Regulation of Generation, Transmission and Distribution 
of Electric Power Act, 1997; 
(i)  “prescribed” means prescribed by rules; 
(J)  “RLNG” means re-gasified LNG; 
(k)  “rules” means rules made under this Act; 
(1)  “Schedule” means a Schedule to this Act; and 
(m)  “self-power generation cost ” means the power generation cost of the captive 
power plant at the Oil and Gas Regulatory Authority’s (OGRA) notified tariff. 
3. Imposition and collection of levy.__ (1) Subject to section 4, every captive power plant shall 
pay to the Federal Government a levy on 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 Ga zette, from 
time to time. 
(2) The agent 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. 
4. Calculation of rate of levy .__ 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: 
Provided that the rate of levy shall be increased by five percent immediately and further 
increased to ten percent by July, 2025, fifteen percent by February, 2026 and twenty percent by August, 
2026. 
5. Utilization of levy.__ (1) The levy shall be utilized by the Federal Government for reduction 
of power generation tariff for all consumer categories of the power sector. 
(2) 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. 
6. Consequences for non-payment of levy.__ (1) If the amount of levy is not paid within the 
specified time by the captive power p lant, the same shall be recoverable under sub -section (2) and in 
case of persistent default in payment, the agent shall terminate the gas supplies to the defaulted captive 
power plant. 
(2) 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. 
 
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7. Allowance to be made for levy for purposes of income tax .__ 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. 
8. Power to make rules .__ (1) The Federal Government may, by notification in the official 
Gazette, make rules to carrying out the purposes of this Act. 
9. Power to amend the Schedule. __ The Federal Government may, by notification in the 
official Gazette, make such amendments in the Schedule as it deems fit. 
10. Removal of difficulties.__ If any difficulty arises in giving effect to the provisions of this 
Act, the President may make an order, not inconsistent with the provisions of this Act, to remove the 
difficulty. 
SCHEDULE 
[See Section 2(a)] 
1. Sui Northern Gas Pipelines Limited. 
2. Sui Southern Gas Company Limited. 
3. Any other company engaged in sale of gas to captive power plants as may be notified 
in the official Gazette. 
 
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RGN Date: 24-06-2025