IHC Suspends Govt’s Gas Levy Notification for Captive Power Plants

The Islamabad High Court (IHC) has put a hold on the government’s notification regarding the gas levy imposed on captive power plants (CPPs). The notification, issued on March 7, proposed a phased increase in the levy—starting with an immediate 5 percent hike, followed by further increments to 10 percent in July 2025, 15 percent in February 2026, and 20 percent in August 2026. Responding to a petition filed by companies operating five power plants, Justice Khadim Hussain Soomro acknowledged the merit of their arguments and issued notices to the respondents, scheduling the next hearing for April 30, 2025. The court has granted temporary relief, subject to legal considerations. The petitioners—limited liability companies involved in various businesses, including power generation through natural gas or LNG—challenged the notification through senior counsel Makhdoom Ali Khan. They urged the court to declare the 2025 Ordinance unconstitutional and prevent authorities from enforcing or recovering the levy. The case cites the Secretary of the Petroleum Division, the Director General of the Oil and Gas Regulatory Authority (OGRA), and the CEOs of Sui Southern Gas Company Limited, Sui Northern Gas Pipelines Limited, and Punjab Industrial Estate Development and Management Company as respondents. Meanwhile, the government had initially planned to announce an Rs8 per unit reduction in power tariffs on March 23. However, due to ongoing discussions with the International Monetary Fund (IMF), the announcement has been postponed to April, with the new rates expected to take effect from April 1, 2025.