Islamabad – The Special Investment Facilitation Council (SIFC) has backed the demands of refineries to withdraw budgetary measures that could lead to their closure and spoil a $6 billion plant upgrade program.
Key Points:
– SIFC endorses refineries’ demands to withdraw budget measures
– Sales tax exemption for petroleum products would prevent refineries from claiming input tax
– Additional 2% customs duty on equipment imports would increase project costs
– Refineries warn of unsustainable operations and negative economic impact
– Government urged to reverse budgetary measures to ensure continued operation and modernization of refineries
Refineries’ Concerns:
Refinery executives pointed out that the sales tax exemption would prevent them from claiming significant input tax paid on purchases and services. They also noted that the additional 2% customs duty on equipment imports would increase project costs, making it difficult for refineries to upgrade their plants.
Government’s Stance:
The Petroleum Division has also favored reversing the budgetary measures to ensure the continued operation and modernization of refineries. The government has recently approved a six-month extension for refineries to sign supplemental agreements with the Oil and Gas Regulatory Authority (Ogra).
Impact on Economy:
The refineries have warned that the budget measures would make their operations unsustainable, negatively impacting the economy and employment generation. The refineries are undertaking upgrade and expansion projects worth $4.5 billion, which would significantly add value to the economy through import substitution and employment generation.