ISLAMABAD: The Korangi Association of Trade and Industry (KATI) has called upon Federal Minister for Petroleum and Natural Resources Ali Pervaiz Malik to immediately withdraw the recently imposed levy on Captive Power Plants (CPPs), describing the move as unjustified and detrimental to industrial growth.
In a formal letter addressed to the minister, KATI President Ikram Rajput challenged the rationale behind the levy, which has been introduced to eliminate the perceived tariff differential between captive power generation and grid electricity. He argued that the government’s comparison framework is fundamentally flawed and based on inaccurate cost assumptions.
According to KATI, the government has benchmarked plant-level generation costs against fully loaded grid tariffs that include capacity payments, cross-subsidies, stranded costs, and other system charges. These costs, Rajput noted, are not directly attributable to captive power units. By incorporating such elements, the methodology artificially inflates the supposed cost advantage of captive generation, effectively turning the levy into what he termed a “punitive overlay” rather than a measure ensuring genuine cost parity.
Rajput further emphasized that the uniform thermal efficiency assumption used in calculating the levy does not account for the operational diversity of industrial cogeneration plants. High-efficiency units that optimize fuel utilization and reduce emissions are being treated on par with less efficient conventional generators. This approach, he warned, discourages energy efficiency and penalizes industries that have invested in modern, environmentally responsible systems.
“The consequences are already evident,” Rajput stated. “Industries are shifting to grid supply not because it is more reliable or economical, but because the levy has distorted the economics of self-generation.”
He added that uninterrupted grid power remains unavailable in several industrial clusters. Additionally, sanctioned load enhancements require significant capital investment, and many industrial units still lack viable grid connectivity. Under these circumstances, KATI maintained, the levy effectively functions as a direct production tax.
The association further highlighted that industries are already bearing cross-subsidies above the actual cost of service. Imposing an additional levy, it warned, would further undermine industrial competitiveness, shrink profit margins, and weaken Pakistan’s export potential.
KATI urged the government to review the policy in consultation with industry stakeholders to avoid further strain on the manufacturing sector and safeguard economic stability.
