By SKM
May 5, 2025
ISLAMABAD: Pakistan’s five local refineries have assured the government their full operational readiness to ensure sustainable supply of high speed diesel and JP-8 to Pakistan’s Armed Forces which are at high alert after false flag operation of Pahalgam by India.
They emphasized in the meeting held here on Monday with Petroleum Minister Mr Ali Pervaiz Malik that all necessary arrangements, including strategic fuel reserves and uninterrupted production capabilities, are in place to support national defense needs in any scenario.
However, the Managing Director of refineries also agitated for the loss of Rs26 billion, they and oil marketing companies (OMCs) have so far braved in the first 10 months of the ongoing fiscal which may reach the staggering figure of Rs32 billion by end of CFY25.
The Petroleum Minister, however, assured that the ministry is going to move ECC (Economic Coordination Committee) pleading for increasing the IFEM (Internal Freight Equalization margin) by Rs1.50-2 per liter and OMCs’ margin by Rs1.20 per liter aiming to recover the loss in next 12 months.
The petroleum division will try to get it approved before the next fortnight. From May 16, 2025, the country would have another opportunity to accommodate refineries and OMCs which are suffering from loss on account of the sales tax exemption measure taken by the Finance Ministry in the budget 2024-25. “From May 16, 2025, the trends in international markets show that a massive decrease in POL prices is expected. So the top officials of the Petroleum Division want to shift some benefit of the expected reduction in POL prices to refineries and OMCs and this is how the end consumers will not feel the heat also.”
The refinery CEOs appreciated the minister’s proactive approach and shared insights on operational challenges, seeking government support in upgradation and fiscal incentives. Both sides agreed to maintain regular consultations to drive the sector forward.
The delegation included Zahid Mir-CEO Pakistan Refinery Limited, Irtiza Qureshi-MD PARCO, Adil Khattak-CEO Attock Refinery Limited, Amir Abbasi-CEO Cynergico, Asad Hasan – CEO National Refinery Limited. Secretary Petroleum Momin Agha, Additional Secretary Zafar Abbas, Director General Oil Imran Ahmed were also present in the meeting.
However, it is yet to be determined in the ECC meeting how FBR functionaries would react to the summary of the Petroleum Division, as the tax collecting agency will advocate for the increase in petroleum levy to show improvement in non-tax revenue. In 10 months, FBR faced a revenue shortfall of Rs833 billion. “Let’s see what happens in the ECC meeting,” a top official who was a part of the meeting of CEOs of refineries with the Petroleum Minister.
Later on, the refineries’ top men also met with Finance Minister Aurangzeb and FBR Chairman Mr Rashid Langrial pleading either for restoration of the zero-rated status of refineries on POL products or abolishment the sales tax exemption on petrol, diesel, kerosene, and LDO (light diesel oil) arguing it has barred the refineries from initiating their upgrade project of $6 billion as upgradation has become unviable in the presence of sales tax exemption on POL products.
The Finance Minister and FBR chairman however acknowledged the issue and promised to have a meeting with the Petroleum secretary and Secretary Petroleum on the subject. However, there are positive indications that the Finance Ministry will undo the sales tax exemption on POL products in the next biudget for 2025-26.
Mr Adil Khattak, Managing Director of Attock Refinery Limited and Chairman of OCAC (Oil companies’ Advisory Council) while talking to Exclusivewaves.com.pk said: “We met the Petroleum Minister and later the Finance Minister with one point agenda that is to resolve the issue created by exemption of petroleum products from sales tax in the Finance Act 2025 which does not allow the refineries and OMCs to adjust sales tax paid at the input stage. This anomaly has not only made normal operations unsustainable but has also nullified the incentives given under the Brownfield Refineries Upgradation Policy making the US dollar 6 Billion investment unviable. The refineries also pointed out that the delay in implementation of the Refineries Upgradation Policy over the last five years for one reason or the other has caused about five billion dollars loss to the country.
Both the Petroleum and Finance ministers assured the refineries’ delegation that they fully understand the problem and would take all possible measures to resolve the issue.” Ends
