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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
02-07-2025
- Business
- Business Recorder
OCAC seeks SIFC intervention over petroleum levy on furnace oil
The Oil Companies Advisory Council (OCAC) has sought intervention from the Special Investment Facilitation Council (SIFC) over the government's decision to impose a petroleum levy (PL) of Rs82,077 per metric ton on furnace oil (FO), Business Recorder learnt on Wednesday. 'On behalf of the Oil Companies Advisory Council and its member companies, we express our deep concern and strong protest regarding the imposition of a Petroleum Levy of Rs82,077 per metric ton on Furnace Oil, effective July 1, 2025, through the Finance Act, 2025,' the OCAC wrote in a letter to the SIFC, dated July 1, 2025. '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,' it added. President Zardari gives assent to Finance Bill 2025 In a separate statement, OCAC chairman Adil Khattak said the imposition of climate support and petroleum levies on FO would raise its price by more than 80% making many industries, shipping and independent power producers (IPPs) unviable. 'It is fashionable to blame IMF [International Monetary Fund] 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. 'If industrial and power production is to be sacrificed to reduce greenhouse emissions then wouldn't Thar coal be the next target; after all the Bretton Woods Institutions both IMF and World Bank discourage use of coal,' he said. According to Khattak, the revenue expected from the petroleum levy (PL/PDL) is also going to be 'a pipe dream' as the price increase would wipe off local sales. 'The refineries forced to export it's total FO production would face substantial loss due to increase in logistics cost and discounted export prices causing substantial dent in their upgrade plans already on hold due to non- resolution of the sales tax issue on permanent basis in spite of numerous meetings and assurances. 'We expect support from Petroleum Minister who, within a short period of assuming office, has proved his grit not only in understanding complex challenges but taking these head-on. We also hope that SIFC would play an effective role in withdrawal of PDL on FO and permanent resolution of the sales tax issue paving the way for the long awaited $6 billion investment in refineries upgrade,' Khattak said. FO is a deregulated product, and its pricing is governed by market forces. It is mainly used for meeting energy needs of domestic industry. The OCAC in the letter argued that the imposition of what it called a substantial fiscal burden would have widespread and adverse financial repercussions across multiple sectors of businesses, threatening their viability and long-term sustainability. '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.' Downstream oil sector deregulation: OCAC refuses to endorse any future road map The letter further stated that imposition of PL and CSL would substantially increase fuel costs, and it also would nullify the gains from recent renegotiations with the IPPs while still obligating the government to make capacity payments effectively increasing the burden on national finances without any corresponding benefit. 'In light of the above, we strongly urge SIFC to intervene and recommend the withdrawal of the PL & CSL on FO. This will help restore policy consistency, support critical sectors of the economy, and uphold the principles of fair and sustainable economic development,' OCAC said.
Express Tribune
29-06-2025
- Business
- Express Tribune
K-P budget leaves hopes in the dust
Where the budget for the fiscal year 2025-2026 shattered people's hopes of a new mega transit or development project for Khyber-Pakhtunkhwa (K-P), it simultaneously hit the province's ailing industry by imposing new fixed and additional taxes on the business classes. Reportedly, the total budget for the upcoming fiscal year has been estimated at Rs2119 billion while the annual total expenditure has been estimated at Rs1962 billion. The budget has been kept at a surplus of Rs157 billion while the allocation for the annual development program has been kept at Rs547 billion. Despite some tax relief, the scope of new taxes and old taxes has been expanded in the budget. According to the finance bill, a ten per cent property tax will be collected from institutions including government, semi-government, development finance, corporate, autonomous, public limited, public sector, private commercial, and distribution businesses, warehouses and guest houses in case of renting or leasing buildings or lands. Similarly, a fifteen per cent tax will be collected from all banks and financial institutions, five per cent from private hospitals, five per cent from medical stores and other businesses related to the health sector. Likewise, a five per cent tax will be levied on endowment land or property used for business purposes. In an interview with The Express Tribune, economist and lecturer at the University of Peshawar, Dr Sanam Khattak cautioned that the proposed tax increases in both the federal and provincial budgets may be too heavy for the province to bear. "Extending the tax net would not only impact the business community but would also increase the prices of daily commodities. Citizens are already burdened with multiple taxes like sales tax, duty tax, excise tax, TV tax, and numerous federal levies. Under such circumstances, the government should focus on offering tax relief rather than imposing further increases. With purchasing power drastically reduced, even the poorest families are struggling under inflationary pressure and taxes. Charging taxes on already unaffordable essentials goes against the principle of equity," explained Dr Khattak. Dr Khattak further explained that given low purchasing power, stagnant incomes and small industry closures, a budget focused on tax hikes presented new economic threats to the province. "While the government aims to boost revenue, increasing taxes under current economic strains may lead to a "bubble effect", with businesses already suffering from energy crises facing further losses," predicted Dr Khattak. Similarly, K-P Chamber of Commerce and Industry President Fazal Muqeem Khan opined that the increased taxes will not have a good impact on the business community. "Currently, half of the 500 factories in the Hayatabad Industrial Zone in Peshawar are closed while seventy per cent of industry in the Gadoon Industrial Estate Swabi is also nonfunctional. Facilities should be provided to small businesses and large units. The government should take interest in providing loans to traders from banks on easy installments, and not impose new taxes or increase the rate of old taxes," said Khan. Conversely, K-P Finance Advisor Muzammil Aslam expressed his satisfaction with the recent budget. "Due to the opposition government in the province, the federation is not paying us the arrears. The government has achieved 93 per cent of the revenue generation target in the province. No new taxes have been imposed in the budget while some taxes have been reduced," claimed Aslam. Criticizing the budget for rewarding its members, K-P Assembly Opposition Leader Dr Ibadullah claimed that the Assembly had not given even a single penny from the previous budget. "The opposition has been sidelined again. Development projects in the corruption-ridden province will again be a victim of corruption. The opposition was not even consulted in the preparation of this budget. The suggestions we had given were not discussed. This budget is nothing but a manipulation of words," lambasted Dr Ibadullah.
Express Tribune
27-06-2025
- Business
- Express Tribune
Sahulat bazaars to offer relief to citizens
Rawalpindi Commissioner Aamir Khattak has announced the establishment of new Sasta Sahulat Bazaars across all six districts and 24 tehsils of Rawalpindi Division. Orders have been issued to identify and formally allocate 3 to 5 kanals of government land in each location for this purpose. The commissioner made the announcement while chairing a special meeting regarding the setup of Sahulat Bazaars. Deputy commissioners from all six districts of the division participated, with DCs from Jhelum, Murree, Attock, and Chakwal joining via video link. Commissioner Khattak stated that the Sahulat Bazaars are a flagship project aimed at providing essential food items, vegetables and fruits at prices lower than those in the open market. "These markets will serve as a practical relief initiative for the public, helping to stabilise prices and curb hoarding," he added. Funds have already been allocated for the Punjab Sahulat Bazaar Authority under the Annual Development Programme 2025, ensuring the availability of necessary financial resources for the timely completion of the project. The commissioner emphasised that the markets must be fully operational before Ramazan 2026.
