SIFC Concerned Over Delays in Brownfield Refinery Upgrades

SIFC Expresses Disappointment Over Delays in Completion of Brownfield Refinery

Islamabad Web Desk: The Special Investment Facilitation Council (SIFC) has voiced disappointment over delays in the completion of the Brownfield Refinery project, initially slated for 2023. These delays have hindered the launch of the refinery upgrade process, which involves an investment of $5-6 billion.

The primary reason for this delay is the unresolved issue of sales tax exemption on petroleum products, a provision included in the Finance Bill for fiscal year 2024-25.

During the “Executive Committee of SIFC” meeting held on December 11, the Petroleum Secretary expressed concerns that the sales tax exemption on petroleum products—such as petrol, kerosene, diesel, and light diesel oil (LDO)—introduced in the 2024-25 budget has made refinery upgrades and operations unfeasible.

“This step has increased the overall project cost by $763 million, putting daily operations of refineries at risk and destabilizing them,” a senior official told The News.

The SIFC meeting resolved that the Petroleum Division, Finance Division, and other stakeholders would convene a working group to propose solid solutions for necessary policy amendments. The Finance Division was directed to consult all relevant institutions to address the post-tax exemption challenges for petroleum products.

Subsequently, the Petroleum Division was tasked with submitting a summary of required actions by January 15, 2025. The Oil and Gas Regulatory Authority (OGRA) was instructed to devise a mechanism to compensate operational losses caused by the tax exemption through the Inland Freight Equalization Margin (IFEM).

Additionally, SIFC directed the relevant authorities to ensure the signing of the upgrade agreements between OGRA and five refineries by January 7, 2025.

Regarding the settlement agreement with Synergico Pakistan Limited (CPL), the SIFC Executive Committee expressed concern over delays in resolving the issue of petroleum levy (PL) settlement, pending since February 2023. The delay has deprived the national treasury of Rs. 15 billion in recoverable funds.