Karachi: The oil industry in Pakistan is expected to bear financial losses of 35 billion rupees in the current fiscal year due to the exemption of sales tax on petroleum products that were provided in the Finance Law 2024.
Industry estimates indicate that refineries will take losses of 18 billion rupees, while OMCS may face a success of 17 billion rupees.
Preventing the exemption, which applies to the spirit of the engine (gasoline), high -speed diesel, kerosene, and light diesel oil, companies from claiming the tax of proportional inputs, and increasing the operational costs significantly. The constant uncertainty also led to the delaying the refinery upgrade agreements with the Oil and Gas Regulatory Authority (OGRA), as the new Minister of Petroleum has not yet participated with the representatives of the industry.
Those familiar with the industry warn that the continued tax exemption will lead to profitability and put severe financial pressure on the sector, which puts important projects at risk to ensure fuel supply without interruption. Fair upgraders – which require investments exceeding $ 6 billion – stopped due to the unnamed tax case.
Once completed, these projects will enable local refineries to produce fuel -compatible fuel with EURO V. In addition, increased diesel production can reduce Pakistan’s dependence on fuel imports, and to maintain valuable foreign currencies.
Tell a senior oil executive News If the government looks at its request, the exemption can be removed in the next budget cycle. The industry has already approached the SIFC and Prime Minister to resolve the issue, but no breach has been achieved yet.