Refineries Urge Resolution of Sales Tax Anomaly Jeopardizing $6 Billion Investment

Refineries-Urge

Islamabad, May 5th, 2025 — A high-level delegation of oil refineries, led by Mr. Adil Khattak, Chairman of the Oil Companies Advisory Council (OCAC), met with the Federal Minister for Petroleum and the Federal Minister for Finance to urgently address a critical issue arising from the Finance Act 2025. The delegation highlighted that the exemption of petroleum products from sales tax under the new legislation has created a serious anomaly — refineries and Oil Marketing Companies (OMCs) are now unable to adjust the sales tax paid on inputs, making normal operations financially unsustainable.

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The delegation warned that this taxation distortion not only disrupts day-to-day business but also undermines the viability of the government’s Brownfield Refineries Upgradation Policy. “The $6 billion investment planned for refinery upgradation is now unfeasible due to the withdrawal of input tax adjustment,” Mr. Khattak stated.

He further pointed out that repeated delays in implementing the Refineries Upgradation Policy over the last five years have already cost the national economy approximately $5 billion in potential savings and development.

Both ministers assured the delegation that they were fully cognizant of the issue and pledged to take immediate steps to address the matter in consultation with relevant stakeholders.

Mr. Adil Khattak emphasized that swift action is essential to restore investor confidence and ensure energy security for the country.

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