Petroleum Division Settles 14-Year-Old Multi-Billion Rupee Duty Issue

Pakistan’s Petroleum Division said that oil refineries have re-invested all the tax revenue they collected through duties, The Express Tribune reported. The division said that refineries collected Rs. 200 billion in revenue since FY 2007 and invested the same amount in new projects such as infrastructure upgrades. The issue came up at a meeting held on 20 August to discuss the Pakistan Oil Refining Policy 2021. The new policy framework outlines several tax exemptions on oil refineries. The Cabinet Committee on Energy (CCoE) raised concerns over whether refineries were efficiently utilizing tariff revenue. In response, the Petroleum Division revised its policy draft and submitted a new version to the CCOE on 1 September, according to Dawn News. In the new draft, the division introduced measures to ensure transparency regarding the refineries’ use of tariff revenue. The measures include a rule that refineries can only use tariff revenue for upgrades or new construction after awarding an Engineering, Procurement and Construction (EPC) contract. The draft also mandates that the Oil & Gas Regulatory Authority monitor and ensure the use of revenue for investment into new refinery projects. The CCOE will assess the new draft and decide whether to approve it or request additional revisions.