KARACHI: The oil industry has raised alarm over the imposition of a hefty petroleum levy (PL) of Rs82,077 per metric tonne on Furnace Oil (FO), effective July 1 under the Finance Act, warning of severe economic consequences.
In a letter to the Special Investment Facilitation Council (SIFC), the Oil Companies Advisory Council (OCAC) expressed grave concerns about the PL, coupled with an existing Climate Support Levy (CSL) of Rs2,665 per metric tonne. The OCAC warned that the combined burden could lead to an 80% surge in FO prices, crippling domestic industries reliant on the fuel.
The OCAC criticized the government for introducing the levies without industry consultation, calling it a disconnect from economic and operational realities. Furnace Oil, a deregulated product used in cement, shipping, textiles, glass, and other industrial sectors, would become economically unviable, potentially forcing widespread shutdowns.
The council emphasized that the levies contradict the government’s goal of promoting domestic manufacturing. Instead of increasing revenue, the taxes could wipe out domestic FO sales, reduce tax collection, and severely damage the refining sector, which may be forced to export FO at a loss.
Additionally, the OCAC warned that the levies would nullify recent gains from renegotiated tariffs with FO-based IPPs, making such plants inactive while still incurring capacity payments.
The council urged the SIFC to intervene and recommend a complete withdrawal of the PL and CSL on furnace oil to preserve industrial activity, support refineries, and maintain economic stability.
Story by Tanveer Malik
