Islamabad: The Shahbaz Sharif-led government has decided to provide another relief to electricity consumers, paving the way for cheaper electricity after imposing the Captive Power Levy as per IMF conditions.

Under the new plan, the government will use the revenue from the Captive Power Levy to provide monthly relief on electricity bills. Government sources stated that as the rate of the levy increases, consumers can expect greater reductions in their electricity tariffs. The federal cabinet has already approved transferring the benefit of the Captive Power Levy directly to electricity consumers.

According to officials, the collected levy will be passed on to consumers every two months. The federal government has enacted a law to gradually impose a levy of up to 20% on captive power plants. Immediately, a 5% levy has been enforced on these plants.

In the next phases, the levy on captive power plants will increase to 10%, followed by 15% in February 2026, and will reach 20% by August 2026. The revenue generated from this levy will be used to reduce tariffs for all categories of electricity consumers across the power sector.

Government sources warned that non-payment of the levy will lead to action against defaulting captive power plants. Persistent defaulters may face suspension of gas supply. Every captive power plant utilizing gas or LNG will be legally obligated to pay the levy to the federal government.

This step is part of the government’s broader plan to make electricity more affordable while ensuring that power generation companies contribute fairly to the sector’s financial stability.