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Express Tribune
03-07-2025
- Business
- 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
02-07-2025
- Business
- 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
Business Recorder
26-06-2025
- Business
- Business Recorder
Gold price per tola gains Rs1,335 in Pakistan
Gold prices in Pakistan increased on Thursday in line with their rise in the international market. In the local market, gold price per tola reached Rs356,000 after a gain of Rs1,335 during the day. As per the rates shared by the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), 10-gram gold was sold at Rs305,212 after a rise of Rs1,144. On Wednesday, gold price per tola reached Rs354,665 after a gain of Rs300. The international rate of gold also increased today. The rate was at $3,340 per ounce (with a premium of $20), after it gained $13, as per APGJSA. Meanwhile, silver price per tola increased by Rs86 to reach Rs3,850.
Business Recorder
26-06-2025
- Business
- Business Recorder
Gold prices post modest gains
KARACHI: Gold prices posted modest gains on Wednesday, tracking a slight uptick in global bullion rates, traders said. According to the All Pakistan Sarafa Gems and Jewelers Association, international gold prices rose by $3, reaching $3,330 per ounce. However, sluggish momentum in the global market limited the impact on domestic rates. As a result, local gold prices edged higher by Rs300 per tola and Rs258 per 10 grams, closing at Rs354,665 and Rs304,068 respectively. Despite the increase, the market remained largely steady without any notable shift in buying patterns. In contrast, the silver market saw a notable decline. Domestic silver rates dropped sharply by Rs26 per tola and Rs22 per 10 grams, settling at Rs3,764 and Rs3,227 respectively. Globally, silver hovered around $36 per ounce. It is worth noting that the open market may trade gold and silver at different prices as compared to those fixed by the association, keeping in view the global market fluctuations. The association links gold trading to interbank exchange rate. Copyright Business Recorder, 2025
Express Tribune
25-06-2025
- Business
- Express Tribune
Gold flat as safe-haven demand cools
Gold prices in Pakistan remained largely flat on Wednesday, mirroring global trends where prices eased due to reduced safe-haven demand following signs of de-escalation between Israel and Iran. Investors also remained cautious ahead of upcoming US economic data. In the domestic market, the price of gold rose slightly by Rs300 to settle at Rs354,665 per tola, according to the All Pakistan Sarafa Gems and Jewellers Association (APSGJA). The price of 10-gram gold increased by Rs258 to Rs304,068. This marginal recovery comes after a sharp drop on Tuesday, when gold fell by Rs3,800 per tola. Interactive Commodities Director Adnan Agar noted that international gold prices touched the high of $3,337 an ounce and low of $3,311 on Wednesday, with current levels hovering around $3,323. "The overall sentiment is weak," he said. Gold is holding support between $3,300 and $3,290, but if it fails to break above $3,340, "we could see further downside". A close below $3,290 might push the market towards $3,200. He added that with geopolitical tensions easing, particularly on the Israel-Iran front, the near-term outlook for gold appears bearish, though a bounce may be possible after further correction. Internationally, spot gold was down 0.3% at $3,314.45 per ounce at 0934 am EDT (1334 GMT) after prices hit their lowest in over two weeks in the previous session, according to Reuters. US gold futures fell by 0.2% to $3,328.10. Meanwhile, the Pakistani rupee recorded a slight gain against the US dollar in the inter-bank market on Wednesday, appreciating by 0.02%. By the end of trading, the local currency closed at 283.72, up by five paisa from Tuesday's close at 283.77. Govt raises Rs467b via T-bills, bonds To support its financing needs, the government raised a total of Rs466.67 billion through auctions of Market Treasury Bills (MTBs) and Pakistan Investment Bonds – Floating Rate (PFL) on Wednesday, according to the State Bank of Pakistan (SBP). In the MTBs auction, the SBP raised Rs322.59 billion across four tenors. The breakdown includes Rs14.02 billion from one-month bills, Rs95.89 billion from three-month bills, Rs64.18 billion from six-month bills and Rs148.50 billion from 12-month bills. The auction saw competitive and non-competitive bids, with the total realised value slightly lower than the face value due to discount pricing. For 10-year PFL, the SBP raised Rs144.08 billion, which includes Rs142.80 billion from competitive bids and Rs1.28 billion in accrued interest. The bonds were issued at a cut-off price of Rs95.1982 million, with an additional Rs5.55 billion accepted through non-competitive bids. The auctions reflect strong market participation, with the MTBs contributing the majority (69%) of the total funds raised, while the PFL accounted for the remaining 31%.
