Govt notifies policy guidelines for imports on foreign supplier’s account through custom bonded storage facilities

ISLAMABAD: Directorate General Oil of Petroleum Division has notified the Policy Guideline on Import on Foreign Supplier’s Account Through Custom Bonded Storage Facilities and asked Managing Director (MD) of Printing Corporation of Pakistan Press for publication in the Gazette of Pakistan for general information.

Directorate General Oil of Petroleum Division through a letter dated 01st September, 2023 to the Managing Director (MD) of Printing Corporation of Pakistan Press, Karachi has asked for publication in the gazette of Pakistan for general information regarding Policy Guidelines on Import on Foreign Supplier’s Account Through Custom Bonded Storage Facilities.

Earlier, the federal cabinet’s economic coordination committee (ECC) in its meeting held on 27th June 2023 had approved a Policy Guideline on the subject “Import on Foreign Supplier’s Account Through Custom Bonded Storage Facilities” which was later ratified by the federal cabinet vide decision No. 382/Rule-19/2023 dated 28th June, 2023.

According to petroleum division, in view of limited local refinery supplies, Pakistan is heavily dependent on import of deficit petroleum products. In order to enhance supply access to the local Oil Marketing Companies (OMCs), diversify the sources of supply and to avail freight economies of scale, international oil suppliers would be facilitated/encouraged to make investments storage and trade of crude oil and petroleum products under the Policy Guidelines

As per the Policy Guideline on Import on Foreign Supplier’s Account Through Custom Bonded Storage Facilities, foreign supplier or its registered subsidiary will be allowed to maintain inventory of crude oil and petroleum products in bulk form, in their own Private Bonded Warehouses or Customs Public Bonded Warehouses located anywhere in Pakistan (without foreign exchange remittances), pending its sale to local purchasers or its re-export therefrom to other foreign countries.

Foreign supplier shall have the option to establish its own registered business of operate through subsidiary company (the Consignee), registered vin Pakistan, having bank accounts in the country, to act under the relevant Pakistani laws/rules for undertaking operational/business activities on behalf of foreign supplier.

The Consignee shall have the options to develop their own dedicated storage infrastructure and utilize the customs public bonded warehouse facility on rent basis located around port premises or anywhere in Pakistan for storing crude oil and petroleum products, duly licensed by the OGRA, under the Pakistan Oil (Refining, Blending, Transportation, Storage and Marketing) Rules 2016.

The Consignee’s Customs Bonded Warehouse shall be licensed by the Customs after fulfilment of requirements for operating as Public Bonded Warehouse for storage of crude oil and petroleum products under Section 12 & 13 of the Customs Act, 1969.

The Consignee shall be registered with the Inland Revenue, Federal Board of Revenue (FBR), under the Sales Tax Act, 1990, as an importer and exporter.

At the time of storing the goods, received under the scheme, the Consignee shall not be required to file Electronic Import Form (EIF) with his Goods Declaration (GD) for in-bonding (IB).

The Consignee shall then sell the goods to licensed purchasers 9Refineries or OMCs) in US Dollars or Pak Rupees against opening of Letters of Credit through scheduled banks without requiring LC confirmation by international banks or advance payments, as per applicable foreign exchange regulations. Sale and purchase of goods between foreign supplier and Pakistani purchaser will be on purely commercial basis without any liability on the part of the Government of Pakistan.

For selling the bonded goods to the local purchasers, the Consignee shall file Electronic Import Form (EIF) with his Goods Declaration (GD) for Ex-bonding (EB), to clear the bonded goods for custody transfer to local purchasers for subsequent home consumption, on payment of all applicable duties and taxes by Consignee on behalf of purchasers. FBR shall allow movement of duty paid products through pipeline or any other mode of transportation and facilitate local purchasers for input/output tax adjustments.

The crude oil and regulated petroleum products stored in the Bonded Warehouse shall only be sold/supplied to Oil Refineries and Oil Marketing Companies (OMCs) respectively, which possess valid license from OGRA and have prior permission of OGRA for each consignment.

For sale of petroleum products in the country from Bonded Storage, the pricing mechanism, as approved by the government/OGRA from time to time, shall be applicable.

The Consignee will pay the port, payable on the imported products, and customs clearing charges etc.

No products, falling under negative list of import policy order in vague, shall be supplied under this scheme. The Consignee would provide a certificate of origin of the product and an undertaking to the relevant regulators (FBR) that neither sanctioned product is imported into Pakistan nor any sanctioned entity has supplied such products.

The Consignee shall be required to fulfilling the conditions mentioned against crude oil and petroleum products falling under restricted items of Import Policy Order for the purpose of import of crude oil and petroleum products.

Since the petroleum products procured under this scheme will be meant primarily for local purchasers, the product so supplied shall conform to the specifications approved /notified by the Government of Pakistan and vessels arranged for the purpose shall only be allowed to discharge, when the quality is cleared by Hydrocarbon Development Institute of Pakistan (HDIP) under the approved policy guidelines of sampling and testing of petroleum products issued by federal government and notified by OGRA.

OGRA shall ensure that allocation/lifting of petroleum products from refineries is not compromised by local purchasers and that product available through this arrangement is not included in mandatory days’ coverage until such time it is purchased and transferred out of the Consignee’s Bonded Storage.

FBR, SBP (if required), OGRA and Ministry of Commerce shall prescribe and notify their respective procedures/regulations for regulating and monitoring of imports and exports under this arrangement.

Re-export of crude oil and petroleum products, received into the country, for storage in Customs Public Bonded Warehouses shall be allowed from the Customs Bonded Warehouses shall be allowed from the Customs Bonded Warehouses, without Letter of Credit or advance payment and Electronic Export Form (EIF) subject to fulfilment of fallowing terms and conditions:

  1.   The crude oil and/or petroleum products have been imported and stored in compliance with above mentioned conditions.
  2.   Prior to export of crude oil and/or petroleum products, the Consignee will give 15 days advance notice to OGRA and oil industry.

c.    The FBR will allow access to its MIS system to OGRA for visibility of the petroleum products in the customs bonded storages on supplier account and OMC account whichever the case may be.

Ahmad Ahmadani
Ahmad Ahmadani
The author is an investigative journalist. He can be reached at [email protected].


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