Islamabad – Oil refineries have raised serious concerns over a recent shift in sales tax regulations, moving from a zero-rated regime to an exemption system.
The refineries are urging Finance Minister Senator Muhammad Aurangzeb to take immediate action to restore the General Sales Tax (GST) mechanism, warning that the change poses a severe threat to their financial stability and future projects.
In a joint letter to the finance minister, the chief executive officers (CEOs) of the five major refineries—Attock Refinery Limited, Cnergyico PK Limited, National Refinery Limited, Pakistan Refinery Limited, and the Managing Director of Pak-Arab Refinery Limited—highlighted the critical challenges this policy shift has created for the refining sector.
The refineries emphasized that the Finance Act 2024 altered the sales tax status of key petroleum products—including petrol, high-speed diesel, kerosene oil, and light diesel oil—from zero-rated to exempt. As a result, refineries are now unable to claim input sales tax, significantly escalating both operational and capital costs.
According to the refineries, this sudden change is jeopardizing the financial feasibility of their upgrade projects, infrastructure expansion, and daily operations. They warned that if the exemption policy remains in place, it will lead to a substantial decline in profitability, putting immense financial strain on the refining sector. “This issue threatens the viability of critical capital-intensive projects and undermines the objectives of the Brownfield Refining Upgradation Policy, which was approved by the government in August 2023,” the refinery executives stated.
Despite persistent efforts over the past seven months, including consultations with the Ministry of Energy (Petroleum Division), the Oil and Gas Regulatory Authority (OGRA), and the Federal Board of Revenue (FBR), refineries report that their concerns remain unaddressed.
“The ongoing delay in resolving this matter is endangering the survival of Pakistan’s refining industry and creating significant financial distress,” the refineries stated. They called on the finance minister to urgently intervene and rectify the issue.
To ensure the continued sustainability of the refining sector, refineries have formally requested an immediate meeting with the finance minister. Industry stakeholders stress that a prompt resolution is essential to prevent further disruptions and safeguard Pakistan’s energy security.
