Petroleum Minister to Take Up Refineries GST Issue with IMF 

Petroleum Minister Ali Pervaiz Malik has decided to take up the matter with the International Monetary Fund (IMF) to resolve the issue of general sales tax (GST) withdrawal for refineries. 

The exemption of GST in the refining sector has caused a loss of Rs 40 billion during the last financial year.

The GST exemption issue has also blocked the $6 billion investment in the refining sector, and even investors were not willing to invest in the presence of such an issue,” sources told NewzTodays.Local oil Refineries to face huge inventory losses

Sources said that the Petroleum Minister believed that the government would have to give a comprehensive package rather than in bits and pieces to secure $6 billion investment in upgradation projects.

“Oil refineries are not producing Euro fuel and we can not afford to give poison to our coming generation,” sources said, quoting the petroleum minister.

At present, the IMF mission in Pakistan and the Petroleum Minister will take up the matter with the mission to end GST exemptions and impose GST in the refining sector.

The government had committed the oil refineries to imposing GST up to 5 percent in the budget 2025-26, but the commitment was not materialized, which had upset the refineries.

Sources said that the Special Investment Facilitation Council (SIFC) has given directions to the finance and petroleum ministries to resolve the issue of GST exemption several times, but the issue has not been resolved yet.

The oil industry is very depressed with the government over its efforts to resolve the issue of GST exemption.

The oil industry has expressed serious concerns over the absence of a solution, which has jeopardised $6 billion worth of investment plans to produce environmentally friendly fuels.

The Oil Companies Advisory Council (OCAC) – an industry lobby – has already warned that the continuation of sales tax breaks has threatened the viability of their businesses. 

The oil industry says that the sales tax exemption is not in line with the broader objectives of the Pakistan Brownfield Oil Refining Policy 2023.

Foreign investors are not ready to pump money into upgradation projects of refineries, OCAC says.

The government has allowed the oil industry to recover Rs1.87 per litre to adjust its losses it faced in 2024-25 due to tax exemption.