Power Division, industry demand removal of petroleum levy on furnace oil and diesel to cut electricity costs

At a Nepra public hearing on Thursday, the Power Division and industrial groups asked the government to reduce or eliminate taxes charged on diesel and furnace oil used to generate electricity. They said these charges add about Rs10 per unit to power costs, as disruption linked to the Middle East conflict has constrained access to less expensive fuels. Industry representatives put the current charges at approximately Rs76,000 per tonne for furnace oil and Rs80 per litre for diesel.

The industrial delegates said generation costs of roughly Rs62 per unit could fall to Rs44-Rs50 if the charges were removed. Power Division entities reported that oil-fired generation supplied 3.6% of electricity in September, following shortages of LNG and other lower-cost sources. PPMC chief financial officer Naveed Qaiser agreed the taxes significantly affect generation expenses and said the division was seeking a change through government forums. He also cited reductions of about Rs10 per unit for consumers overall and up to Rs18 for industry under existing government measures.