By SKM
June 11, 2025
ISLAMABAD: The Oil Companies Advisory Council (OCAC) and its members have a deep shown concern with strong protest over the continuation of sales tax exemption on petroleum products in the Finance Bill for FY26 arguing it will jeopardize the $6 billion investment in upgrade projects of local refineries.
In a letter written on June 11, 2025 to Federal Minister for Petroleum Division Mr Ali Parvaiz Malik, the OCAC acknowledged the government’s interim relief by allowing recovery of the GST impact through the Inland Freight Equalization Margin (IFEM) effective May 16, 2026, yet this remains as a temporary measure with inherence implications.
OCAC in the letter to the Petroleum Minister said: “The continuation of GST exemption in the Finance Bill for FY26 on petrol, HSD, Kerosene and LDO, despite repeated representations from the industry and your personal commitment during your recent visit to Karachi that the exemption would be withdrawn through the Finance Bill, reflects a lack of recognition of the financial and operational burden this sales tax issue places on the downstream oil sector. It threatens the viability of businesses, undermines investor confidence and is inconsistent with broad objectives of Pakistan Brownfield Refining Policy, 2023.”
The refineries under the umbrella of OCAC have strongly urged the immediate withdrawal of the GST exemption on petroleum products and request its replacement with a sales tax mechanism that allows for full input tax adjustments. This is the only durable and just solution that will restore financial stability, tax neutrality and regulatory clarity to the sector failing which we are all set to jeopardize investment of $6 billion in Pakistan Refining Sector under the Brownfield Refining Policy.
OCAC members placed the request for meeting with the petroleum minister to discuss the issue in detail and secure a path towards permanent resolution. Ends
