By SKM
December 30, 2024
ISLAMABAD: After failures to remove the hurdle of imposition of sale tax exemption on POL products in the budget 2024-25 at all government forums that has virtually put the upgradation of local refineries with $6 billion investment at a halt, OGRA has asked the refineries to approach the top mandarins of the petroleum division again as their deadline of signing the implementation agreements to initiate their upgrade projects has elapsed on October 22.
This has irritated the oil companies’ advisory council and the refineries as well as more meetings on the same issue would not yield results mainly because of the red tapism.
The Executive Committee of Special Investment Facilitation Council (SIFC) in its December 11 meeting expressed dismay over the delay in actualizing the Brownfield Refinery, 2023 owing to which the upgradation of the local refineries with $5-6 billion investment has not yet kicked off mainly because of the failure of the authorities to resolve the sales tax exemption on POL products. As per the minutes of the SIFC meeting, Secretary Petroleum raised concerns that the exemption of sales tax on Petroleum Products (Petrol, Kerosene, Diesel and LDO) in the budget 2024-25 rendered upgradation & refinery operations apparently unviable, impacting overall project cost by $763 million, routine operations of refineries at risk & unsustainable. The same SIFC meeting decided that the Petroleum Division will move a summary for extension of deadline for signing of implementation agreement for upgrade project beyond 22nd October, 2024 under refining policy by 10th January, 2025.
Now under the latest scenario, OGRA in its latest letter of December 26 available with the Exclusivewaves.com.pk asked Attock Refinery Limited, National Refinery Limited and Cnergyico Pk Ltd to have access to the petroleum division for the way forward as the date of the signing Implementation Agreements (IAs) has elapsed. More importantly, the Petroleum Division in its letter written on December 30, 2024, to PSO, OCAC (oil companies advisory council) and the focal person on oil refineries communicated that a crucial meeting on sales tax is going to be held here today (Tuesday).
Mr Adil Khattak, OCAC chairman, when contacted, said that the continued delay in implementation of the Brownfield Refineries Upgradation Policy is the result of the typical bureaucratic attitude of passing the buck, meetings followed by more meetings but with no result.
The Brownfield Refineries Upgradation Policy which took 5 years in the making was approved in August 2023, was amended in February 2024 but it’s implementation was stalled due to exemption of petroleum products from sales tax in the Finance Act 2024 which deprived the refineries from claiming most of the sales tax paid at the input stage making not only their Upgradation projects unviable but also their current operations unsustainable. Even directives from PM office and SIFC remain unheeded.
SIFC in it’s Executive Committee meeting of October 22, 2024 asked the the relevant authorities to resolve this issue by November 10, 2024. Prime Minister office in it’s letter dated November 11, 2024 directed that the sales tax be resolved within two weeks. The matter was also raised with the Finance Minister during his visit to the OICCI office on December 7, 2024 who assured to resolve it. SIFC in it’s meeting held on December 11, 2024 directed Petroleum Division to move a summary by January 15.
After numerous meetings at different fora OGRA in it’s letter dated December 26, 2024 has now asked the refineries to take it up with the Federal government as it’s a policy issue. DG Oil meanwhile has asked PSO and refineries to attend a meeting at office of Chief, Sales Tax, FBR on December 31, 2024 (today).Ends
