$6bn upgrade of refineries project: SIFC asks PD to resolve Sales Tax exemption issue by Nov 12

ISLAMABAD: The Special Investment Facilitation Council (SIFC) Tuesday directed the Petroleum Division (PD) to resolve the Sales Tax exemption issue by November 12 next month.

The budgetary measure imposed in the Finance Bill for FY25 has hampered the initiation of $6 billion investment for upgrade projects. These projects are yet to be kick-started by local refineries, a senior official of the Energy Ministry, who was a part of the meeting, told The News.

“Petroleum Division’s top officials, after consultation with relevant officials of Finance Ministry and FBR, should resolve the issue of Sales Tax exemption by November 12, so that upgrade projects of refineries, valued $6 billion, could be started,” the council directed.

Once upgradation takes place in 7 years’ time, the country would have petrol and diesel with Euro-V specifications, and production of Furnace Oil would be reduced to minimum level.

The Sales Tax exemption on petrol, diesel, kerosene oil and light diesel oil (LDO) has been effectively disallowed, claiming 80-85pc of input tax, which makes the existing refining operations unsustainable and upgradation projects unviable.

The SIFC has also asked the Petroleum Division to prepare a summary seeking further extension of possible minimum period allowing refineries to sign Implementation Agreements (IAs) with Ogra, imperative to kick-start upgrade projects.

The decisions were taken in the SIFC meeting chaired by Dr Jehanzeb Khan, ex-Deputy Chairman Planning Commission and now Special Assistant to PM and Chairman SIFC Apex Committee. The meeting was attended by Chairman Ogra, Additional Secretary Petroleum Division and Chief Tax Policy, FBR. The refineries were led by Adil Khattak, Chairman OCAC and CEO Attock Refinery Ltd. All other refineries were represented by their CEOs online.