KARACHI: Pakistan’s five local refineries have linked the signing of Upgrade and Escrow Agreements with the Oil & Gas Regulatory Authority (Ogra) to the resolution of critical issues facing the sector. With the October 22 deadline approaching, the refineries have expressed concerns that unresolved matters are jeopardizing their operations and upgrade plans.
In a letter to Ogra, the refineries highlighted the detrimental impact of recent changes to the sales tax on petroleum products, implemented through the Finance Act, 2024. The change has nullified the incentives provided under the Brownfield Refining Policy, affecting both current operations and future upgrade projects.
Another major issue raised was the unchecked smuggling of petroleum products, which has significantly reduced sales and capacity utilization. Smuggled high-speed diesel (HSD) and motor spirit (MS) now account for 20% of the country’s annual consumption, resulting in a $1 billion annual revenue loss.
The refineries emphasized that resolving these issues, along with ensuring stronger actions against smuggling, is essential before they can proceed with over $6 billion in planned upgrades.
Story by Tanveer Malik
