ISLAMABAD: The oil industry has raised alarm over the government’s failure to withdraw the general sales tax (GST) exemption on petroleum products in the Finance Bill 2025, warning that it puts at risk \$6 billion worth of planned investments for refinery upgrades under the Pakistan Brownfield Oil Refining Policy 2023.
In a letter to the Ministry of Energy (Petroleum Division), the Chairman of the Oil Companies Advisory Council (OCAC) conveyed the industry’s “deep concern and strong protest” over the continuation of the sales tax exemption, stressing that it threatens business viability, investor confidence, and tax neutrality.
The government had earlier allowed a temporary recovery of Rs1.87 per litre through the Inland Freight Equalisation Margin (IFEM) and pledged to impose up to 5% sales tax in FY2025-26. However, the promise was not fulfilled in the latest budget.
“This remains a temporary measure with inherent implications,” stated the OCAC chairman, adding, “We urge the immediate withdrawal of the GST exemption and its replacement with a proper sales tax mechanism that ensures full input tax adjustment.”
The letter underscored that without urgent corrective action, the sector faces regulatory uncertainty and the proposed \$6 billion investments in refinery upgrades are at serious risk. The OCAC has requested an urgent meeting with the petroleum minister to secure a lasting resolution.
Story by Zafar Bhutta
