ISLAMABAD: The Prime Minister’s Office (PMO) has directed stakeholders to reach a consensus to remove General Sales Tax (GST), a key obstacle in implementing the new Refinery Policy.
On October 22, a meeting was held at the PMO where the Oil Companies Advisory Council (OCAC) provided a briefing on the critical challenges faced by refineries, with particular emphasis on the GST issue, rampant smuggling of petroleum products, and the uncontrolled import of High-Speed Diesel (HSD).
The OCAC representative highlighted the negative impact of these issues on refinery operations and profitability, stressing that resolving them is crucial to the signing of the Brownfield Refinery Policy 2023. The unresolved matters are causing a significant annual foreign exchange loss of $1 billion to the country.
According to sources, the Ministry of Energy (Petroleum Division) informed the participants that a comprehensive summary addressing the GST issue is currently being processed for necessary approvals.
The Chairman of the Oil and Gas Regulatory Authority (OGRA), Masrur Khan outlined ongoing efforts to combat the smuggling of petroleum products through a coordinated approach involving law enforcement agencies, district administrations, and OGRA. He noted that additional engineers had been hired to enhance the capacity of inspection teams responsible for identifying and shutting down illegal retail centers selling smuggled petroleum products.
The representative of the Special Investment Facilitation Council (SIFC) urged the Petroleum Division to expedite the resolution of the GST issue and strengthen OGRA’s capacity to lead the anti-smuggling campaign. This initiative will involve collaboration between the Petroleum Division, OGRA, SIFC, and provincial and local administrations.
The meeting concluded with unanimous decisions on the following points:(1) The Petroleum Division will ensure the resolution of the GST exemption issue (in collaboration with the Finance Division/FBR) regarding petroleum products affecting the viability of Brownfield Refineries Upgradation ;(2) The Petroleum Division will present a comprehensive plan to eliminate illegal petroleum outlets (in collaboration with OGRA, provincial authorities, and industry stakeholders) and address the sale of substandard fuel;(3) OGRA will be responsible for curbing the sale of substandard and below-specification fuels in the market;(4) Chairman of OGRA will certify in writing that all SOPs and regulatory guidelines related to the import and utilization of refinery stocks of petroleum products are being strictly adhered to ; and (5) The FBR will present a plan, with timelines, for resolving tax refund issues related to Oil Marketing Companies (OMCs).
The sources said, since the GST issue remains unresolved due to IMF conditions, the PMO, in a communication of November 29, 2024 titled “Pakistan Oil Refining Policy for Upgradation of Existing Brownfield Refineries 2023: Impact of Sales Tax Exemption on Petroleum Products under the Sales Tax Act 1990,” has directed the Petroleum Division to hold a meeting with the Finance Division, FBR, and OGRA to reach a consensus. The PMO has requested the Petroleum Division to submit properly firmed-up options for the Prime Minister’s review and approval within two weeks.
