Refineries push for tax concessions from ECC

ISLAMABAD: The petroleum division is preparing to place a summary before the Economic Coordination Committee (ECC) to revise the oil refinery policy by removing sales tax on imported machinery and addressing the issue of operational sales tax, according to an official statement.

The development came during a high-level meeting chaired by Federal Minister for Petroleum Ali Pervaiz Malik at the petroleum division, where chief executives and managing directors of the country’s oil refineries reviewed steps to speed up implementation of the Brownfield Upgradation Refinery Policy.

At the meeting, Malik described the refining sector as strategically important and said domestic refineries were critical national assets for maintaining uninterrupted fuel supplies and reinforcing Pakistan’s energy security. He said the regional situation linked to the US-Iran conflict had further underlined the need to cut dependence on external supply chains and maximise domestic refining flexibility and capacity.

The minister said the timely upgradation of existing refineries was necessary to raise production capacity, improve efficiency and ensure the supply of cleaner Euro-V fuels in line with international standards. He added that refinery modernisation would allow local plants to produce Euro-V compliant fuels, which would contribute to better environmental outcomes, improved engine performance and lower emissions.

Malik noted that although both refining policies were issued in 2023, implementation had remained stalled. He said it was essential to remove bottlenecks to move refinery modernisation forward and attract long-term investment into the sector.

Key issue identified

During the session, participants carried out a detailed review of the refining policies and the refinery upgradation agreement template to support their effective and timely operationalisation. The CEOs and MDs outlined major obstacles and suggested practical steps to resolve them. They also expressed full confidence in the petroleum division’s efforts.

The exemption of sales tax on petroleum products was identified as the main issue affecting the viability of upgradation projects. The minister directed officials to finalise a comprehensive proposal to address these challenges and submit it to the relevant forum before the upcoming budget is finalised so that the refining policies can be implemented without delay.

The minister reaffirmed the government’s commitment to supporting refinery upgradation as a national priority and stated that modernising Pakistan’s refining infrastructure is essential for ensuring energy security, promoting cleaner fuels and strengthening the country’s resilience against external disruptions.

The meeting was attended by the secretary petroleum, additional secretary (policy), director general oil, the chief executive officer of Pakistan Refinery Limited, the managing director of PARCO, the chief executive officer of Attock Refinery Limited, the chief executive officer of Cnergyico and the chief executive officer of National Refinery Limited.

The official statement said the proposed policy changes are aimed at removing tax-related hurdles that have slowed progress on refinery upgrades despite the policy framework already being issued in 2023.