ISLAMABAD: The Special Investment Facilitation Council (SIFC) has expressed dismay over the delay in actualizing the Brownfield Refinery, 2023 owing to which the upgradation of the local refineries with $5-6 billion investment has not yet kicked off mainly because of the failure of the authorities to resolve the sales tax exemption on POL products—a budgetary measure included in finance bill for FY25.
“In the meeting of the Executive Committee of SIFC held on December 11, 2024, Secretary Petroleum raised concerns that the exemption of sales tax on Petroleum Products (Petrol, Kerosene, Diesel and LDO) in the budget 2024-25 rendered upgradation & refinery operations apparently unviable, impacting overall project cost by $763 million, routine operations of refineries at risk & unsustainable,” a senior official told The News.
SIFC meeting decided, he said, that the Petroleum Division (PD), in collaboration with the Finance Division (FD), and other stakeholders to hold a working group meeting to reach a firmed-up way forward on the required amendments in the policy. The Finance Division would consult all concerned to rectify the situation after sales tax exemption on the petroleum products.
“Subsequently, the Petroleum Division has been asked to move a summary for required action by 15th January 2025. Ogra was directed to determine the modus operandi for meeting operational loss (due to sales tax exemption) through IFEM (Inland Freight Equalization Margin). The SIFC also asked relevant authorities to ensure signing of upgradation agreement between Ogra and five refineries by January 7, 2025.” As far as the settlement Agreement of Cnergyico Pakistan Limited (CPL) in light of earlier decisions, he said, the Executive Committee meeting of SIFC raised concerns over delayed settlement of PL (petroleum Levy) of CPL since February 2023, depriving national exchequer recovery of Rs15 billion. The meeting held in the Finance Division on 13th September 2024. CPL acknowledged the dispute and requested that the matter of LPS (late Payment Surcharge) be dealt with separately so that the principal amount can be paid and preparatory work for upgrade is commenced. “The Petroleum Division and Finance Division maintain that LPS is applicable. However, the Law Division suggested that a distinction be made between principal amount and LPS. The SIFC meeting, however, decided that the Petroleum Division would take lead and expedite meeting within a week of the committee already formulated on the matter to comply with the decision to ensure that all refineries are upgraded and the pending government dues are recovered. The issue of LPS would be dealt with separately.”
As for as status of discussions with Mubadala in UAE over PARCO upgrade is concerned, Secretary Petroleum apprised SIFC that PARCO’s board of directors in its meeting held on October 21, 2024, requested for extension of deadline for signing of upgraded agreement and advised PARCO management to rationalize the project cost.
The SIFC meeting decided that the Petroleum Division will move a summary for extension of deadline for signing of implementation agreement for upgrade project beyond 22nd October, 2024 under refining policy by 10th January, 2025.
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