ISLAMABAD: The Oil Companies Advisory Council (OCAC) has called for urgent government intervention to address critical challenges threatening the sustainability of Pakistan’s downstream oil sector, including the removal of sales tax exemptions on petroleum products and delays in revising Oil Marketing Companies (OMCs) margins.
In a letter to Prime Minister Shehbaz Sharif, OCAC Chairman Adil Khattak highlighted the financial strain caused by reclassifying petroleum products from zero-rated to exempt under the Finance Act 2024. This change has made input sales tax claims ineligible, escalating operational and capital costs for refineries and jeopardizing critical upgrade projects under the Brownfield Refining Upgradation Policy. Despite seven months of follow-ups with relevant authorities, including the Ministry of Energy and Federal Board of Revenue (FBR), no resolution has been reached.
OCAC also emphasized the urgency of revising OMC margins, which have been overdue since September 2024. The council pointed out that delays in adjustments to account for financing costs, turnover tax, operational losses, and expenses are eroding profitability and hindering operations.
“This matter is critical for the industry’s survival in Pakistan. We respectfully seek your urgent intervention for a swift resolution,” the letter stated.
OCAC urged the prime minister to convene a meeting to address these pressing concerns and ensure the sustainability of Pakistan’s downstream oil industry.
