ISLAMABAD: The government has initiated a crackdown on the smuggling of petroleum products, including measures to regulate the rampant import of High-Speed Diesel (HSD), aimed at enhancing refinery operations and profitability.
These decisions were made during a meeting of the Special Investment Facilitation Council (SIFC), which included participation from key stakeholders.
According to sources, the Oil Companies Advisory Council (OCAC) provided a concise briefing on the critical challenges faced by refineries, highlighting the issues of sales tax, pervasive smuggling of petroleum products, and the unchecked import of HSD. OCAC presented data on smuggling that adversely affects refinery operations and profitability, noting that resolving these issues is essential for the implementation of the Brownfield Refinery Policy 2023. The unresolved challenges are causing an estimated annual foreign exchange loss of $1 billion to the state.
The Ministry of Energy (Petroleum Division) informed participants that a comprehensive summary addressing the sales tax issue is currently under review for necessary approvals.
The Oil and Gas Regulatory Authority (OGRA) outlined ongoing efforts to combat petroleum product smuggling through a coordinated approach involving law enforcement agencies, district administrations, and OGRA itself. They emphasized that additional engineers have been hired to strengthen inspection teams tasked with identifying and shutting down illegal retail centers selling smuggled petroleum products.
SIFC urged the Petroleum Division to expedite the resolution of the sales tax issue and to enhance OGRA’s capacity in leading the anti-smuggling campaign. This initiative will involve collaboration among the Petroleum Division, OGRA, SIFC, and provincial and local administrations.
Meeting participants unanimously agreed on the following actions – (i) Petroleum Division to ensure the resolution of Sales Tax exemption issue (in collaboration with Finance Division / FBR) on petroleum products affecting the viability of Brownfield Refineries Upgradation by November 10, 2024 ;(ii) Petroleum Division to present a comprehensive plan for the elimination of illegal petroleum outlets (in collaboration with OGRA, provincial authorities, and industry stakeholders) and check sale of substandard fuel by November 7, 2024 ;(iii) OGRA is responsible for curbing substandard and below-specification fuels from the market;(iv) Chairman OGRA to certify in writing that all Standard Operating Procedures (SOPs) and regulatory guidelines related to the import and utilization of refinery stocks of petroleum products are being strictly adhered to in both letter and spirit; and ( v) FBR to present plan with timelines for resolution of tax refund issues related with Oil Marketing Companies (OMCs) by November 7, 2024.
