Refineries urge Ogra to resolve tax issues for $6bn upgrades

KARACHI: Three major refineries have informed the Oil and Gas Regulatory Authority (Ogra) that there has been no delay on their part in signing upgrade agreements. This follows Ogra’s proposal to reduce the deemed duty on high-speed diesel (HSD) for refineries that fail to sign upgrade agreements.

In a joint letter to Ogra, Attock Refinery, National Refinery and Cnergyico Refinery referred to a communication addressed to the Petroleum Division. The letter sought the refineries’ views on reducing deemed duty on HSD, as stipulated in Clause 6.1.3.5 of the Brownfield Refining Policy, for those not signing the agreements. It also referenced a request for an extension in the policy’s deadline, as reported by The News on Tuesday.

The refineries clarified that they have adhered to the timelines set out in the Brownfield Refining Policy and are committed to upgrading their facilities, adding that the upgrade and escrow account agreements with Ogra have already been finalised.

However, they highlighted that completing the upgrade projects -- requiring investments of over $6 billion -- hinges on resolving the issue of sales tax on petroleum products. “The quantum of investment necessitates urgent resolution of the sales tax issue before the agreements can be executed,” the refineries said.

While acknowledging positive engagements with the government, including the recent Special Investment Facilitation Council (SIFC) meeting on October 22, 2024, the refineries noted that the matter remains unresolved.

They urged Ogra and the Ministry of Energy to assist in resolving the issue and requested a revised extension of the deadline for signing the agreements.The joint letter follows the signing of an upgrade agreement by Pakistan Refinery Limited with Ogra. Meanwhile, the Pak-Arab Refinery (Parco) has yet to complete its study to finalise the scope of its upgradation project.The refineries said that resolving these issues is vital to moving forward with the upgrades, which are critical for the energy sector and the country’s economic interests.