ARL signs agreement with STP Studi Technologie Progetti of Italy
Carlo Gustavo Lombardi, CEO, STP and Adil Khattak, CEO, ARL signed on behalf of their companies.
This is an important milestone towards ARL's goal of value addition and environment friendly production.
ARL has already completed Licensor FEED studies for addition of Continuous Catalyst Regeneration (CCR) Unit and Revamp of Diesel Hydro Desulfurization Unit by UOP/ Honeywell of USA under it's major upgradation project at an estimated project cost of upto $600 million.
Copyright Business Recorder, 2025
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Express Tribune
2 days ago
- Express Tribune
New levies to raise fuel oil prices
OCAC urged the Special Investment Facilitation Council to intervene and recommend the withdrawal of petroleum and climate support levies on furnace oil, which would help restore policy consistency and support critical sectors. PHOTO: FILE Listen to article The Oil Companies Advisory Council (OCAC) has cautioned the Special Investment Facilitation Council (SIFC) that the climate support and petroleum levies on furnace oil have become effective from July 1, 2025, which will raise its price by over 80%, making many industries, shipping services and independent power producers (IPPs) unviable. In a letter sent to SIFC, OCAC Chairman Adil Khattak said that the advisory council and its member companies had expressed deep concern and protested over the imposition of petroleum levy of Rs82,077 per metric ton on furnace oil through the Finance Act 2025. "This levy, in addition to the Climate Support Levy of Rs2,665 per metric ton, poses a serious threat to the overall business environment," he said. "While we acknowledge and appreciate the support extended by the Special Investment Facilitation Council in securing an interim relief from the government – through the recovery of inadmissible general sales tax (GST) on petroleum products via the inland freight equalisation margin (IFEM), this remains a temporary measure with limited scope," he said and demanded a sustainable solution by restoring the taxable status of currently exempt petroleum products, ie, motor spirit (petrol), high-speed diesel (HSD), kerosene oil and light diesel oil (LDO). He called SIFC's continued support pivotal until full and permanent resolution of the matter. Khattak stated that the abrupt imposition of levies on furnace oil without prior consultation with the industry reflects a complete disconnect from the economic and operational challenges being faced by the sector. Furnace oil is a deregulated product and its pricing is governed by market forces. It is mainly used to meet energy needs of the domestic industry. "The imposition of such a substantial fiscal burden will have widespread and adverse financial repercussions across multiple business sectors, threatening their viability and long-term sustainability," he remarked. OCAC said that the new levies would increase furnace oil prices by approximately 80%, making its use economically unviable for key industries such as cement, shipping, textile, glass, tyre manufacturing, large-scale industrial units, foundries and other sectors reliant on boilers and furnaces (commonly referred to as general trade). This drastic price increase would eliminate domestic furnace oil demand and cause a sharp decline in industrial activity, potentially resulting in partial or complete operational shutdowns, especially where no viable fuel alternatives exist, it warned. In the letter, OCAC underscored that this measure was in direct contradiction to the government's stated commitment to promoting domestic manufacturing. Rather than enhancing revenues, it is likely to significantly reduce or eliminate furnace oil sales within the country, thereby slashing associated sales tax revenues and undermining industrial competitiveness. "It will also defeat the objective of collecting the envisaged revenue through the imposition of petroleum and climate support levies." In the absence of domestic demand, the advisory council said, local refineries would be forced to export furnace oil at a considerable financial loss. This will further strain the financial condition of Pakistan's refining sector and compromise its sustainability. It pointed out that the government had recently renegotiated tariffs with furnace oil-based IPPs but the new levies would substantially increase fuel costs, pushing those plants lower on the merit order and rendering them inactive. "This will nullify the gains from recent renegotiations while still obligating the government to make capacity payments, effectively increasing the burden on national finances." In light of the above, OCAC urged SIFC to intervene and recommend the withdrawal of petroleum and climate support levies on furnace oil. It believes this will help restore policy consistency, support critical sectors of the economy and uphold the principles of fair and sustainable economic development. "We remain committed to engaging in constructive dialogue and are available for an urgent meeting to further discuss this matter in the national interest," the OCAC chairman added.
Business Recorder
2 days ago
- Business Recorder
SIFC's intervention sought: OCAC, members say concerned over imposition of PL on furnace oil
ISLAMABAD: The Oil Companies Advisory Council (OCAC) and its member companies have expressed deep concern and strong protest regarding the imposition of a petroleum levy (PL) of Rs82,077 per metric ton on furnace oil (FO), effective July 1, 2025, through the Finance Act, 2025, seeking Special Investment Facilitation Council (SIFC)'s intervention in the matter. In a letter to the SIFC national coordinator, OCAC Chairman Adil Khattak has stated that this levy comes in addition to climate support levy (CSL) of Rs2,665 per metric ton on FO, and poses a serious threat to the overall business environment in the country. 'While we acknowledge and sincerely appreciate the support extended by the SIFC in securing interim relief from the Government of Pakistan through recovery of inadmissible general sales tax (GST) on petroleum products through the Inland Freight Equalization Margin (IFEM) mechanism, we would like to emphasise that this remains a temporary measure with limited scope. A sustainable solution requires the restoration of the taxable status of currently exempt petroleum products i.e. motor spirit (MS), high-speed diesel (HSD), kerosene, and light diesel oil (LDO). The SIFC's continued support is pivotal till the full and permanent resolution of this matter. The abrupt imposition of PL and CSL on FO without prior consultation with the industry signals a total disconnect from the economic and operational challenges currently being faced by the industry. FO is a deregulated product, and its pricing is governed by market forces. It is mainly used for meeting energy needs of our domestic industry.' He said the imposition of such a substantial fiscal burden will have widespread and adverse financial repercussions across multiple sectors of businesses, threatening their viability and long-term sustainability. The letter stated: In this context, we respectfully submit the following points for your urgent consideration: The imposition of PL and CSL will increase FO prices by approximately 80 per cent, making its use economically unviable for key industries such as cement, shipping, textiles, glass, tyre manufacturing, large-scale industrial units, foundries, and other sectors relying on boilers and furnaces (commonly referred to as general trade). This drastic price increase will eliminate FO domestic demand and drive a sharp decline in industrial activity, potentially resulting in partial or complete operational shutdowns-especially where no viable fuel alternatives exist. This measure stands in stark contrast to the Government of Pakistan's stated commitment to promoting domestic manufacturing. Rather than enhancing revenues, it is likely to significantly reduce or eliminate FO sales within the country, thereby, decreasing associated sales tax revenues and undermining industrial competitiveness. Additionally, it would also defeat the objective of collection of envisaged revenue by imposing PL and CSL on FO. Khattak stated that the imposition of climate support and petroleum levies on FO effective July 1, 2025 will raise its price by more than 80 per cent making many industries, shipping and IPPs unviable. 'It is fashionable to blame IMF for everything under the sun but the two probable reasons given: to cut down carbon emissions or meet the revenue shortfall do not justify this ill-advised decision,' he said, adding that if industrial and power production is to be sacrificed to reduce greenhouse emissions then would not Thar coal be the next target; after all the Bretton Woods Institutions both IMF and World Bank discourage use of coal. The revenue expected from PL is also going to be a pipe dream as the price increase would wipe off local sales. Copyright Business Recorder, 2025
Express Tribune
23-06-2025
- Express Tribune
Refineries warn of 'catastrophic effect'
The government may collect revenue of Rs75 billion on estimated consumption of around 0.9 million tons (950 million litres) of furnace oil during the outgoing fiscal year 2024-25. photo: file Oil Companies Advisory Council (OCAC) Chairman Adil Khattak has cautioned the government that the imposition of carbon and petroleum levies would have a catastrophic effect on refineries. These refineries use furnace oil in-house as fuel in furnaces, boilers, power generation and other operations. "Applicability of the proposed carbon and petroleum levies on furnace oil being used in their own processes will result in a phenomenal increase in operation cost, which will cause heavy losses and the closure of refineries," he told The Express Tribune. He warned that the two levies would raise furnace oil prices by more than 80%, sounding the death knell for a few industries including refineries, shipping and independent power producers (IPPs), which use it as a fuel or consume it in their own utilities' operations. "Is it disconnect between power and petroleum mandarins, ignorance of its negative fallout or mischievous intrigue of the import mafia," he asked and pinned his hopes on the petroleum minister. Under the International Monetary Fund's Resilience and Sustainability Facility, the government is expected to impose both carbon levy and petroleum levy on furnace oil from July 1, 2025 to curb excessive fossil fuel consumption and gather additional funds for green energy programmes. This is for the first time the government will impose Rs79.5 per litre in levies on furnace oil including Rs77 worth of petroleum levy and Rs2.5 in carbon levy. This will inflate the price of furnace oil by Rs85,000 per ton (57%) to around Rs235,000 and may impact its demand. If international crude oil prices stay above $75 per barrel during the remaining days of the ongoing month, the furnace oil price, after adding the proposed levies, may go up by 67% to Rs250,000 per ton. The government may collect revenue of Rs75 billion on estimated consumption of around 0.9 million tons (950 million litres) of furnace oil during the outgoing fiscal year 2024-25 compared to 1.2 million tons in the previous year. Over the last three years (FY23-25), Pakistan's furnace oil consumption has dipped sharply by an average of 40% per annum. Interestingly, 10 years ago, the furnace oil demand was around 9.2 million tons as the power sector was a major consumer since furnace oil-based electricity had a share of around 35% in total power generation. Of late, coal and liquefied natural gas (LNG) have substituted furnace oil, which now has a share of only 1.5% in electricity production. Local refineries produce around 2.5 million tons of furnace oil, of which 1.5 million tons are exported annually. "We believe that the industry will continue to use furnace oil as an emergency fuel while gradually shifting towards renewable sources of electricity generation. We do not expect a major impact on listed firms as most of the companies have already shifted to coal and solar-based power generation," Sherman Securities said in a report. The decline in furnace oil sales may not impact oil marketing companies (OMCs) as the fuel's share in total revenue is negligible. However, this is "negative" for refineries, where furnace oil comprises around 24% of production mix, it said. "It is anticipated that refineries will now focus on exporting surplus quantity of furnace oil as local consumption will further dry down; otherwise they will be compelled to reduce refinery throughput or temporarily shut down production units, which will negatively affect their earnings." Similarly, if surplus quantity is exported, their gross revenue margins (GRMs) may be affected as furnace oil usually sells at a discount in the export market. Assuming current industry GRMs of $10 per barrel, every $5 per barrel discount on exports will dent GRMs by 12%. However, the impact varies on a company-to-company basis (considering the production mix) and depends on availability of the buyer in export markets. For north-based refineries, including Attock Refinery, the cost of export will be higher, hurting their earnings.
