Pakistan’s leading oil refineries are advancing multi-billion-dollar upgrade projects to enhance domestic production of petrol and diesel, aiming to reduce reliance on imported fuels. In a recent meeting with Finance Minister Muhammad Aurangzeb, refinery CEOs outlined investment plans that could potentially save the country up to $1 billion annually in foreign exchange by decreasing the need for imported refined products.
The refineries, which collectively process approximately 450,000 barrels of crude oil daily, have seen increased demand in the transport and agriculture sectors. In the first four months of fiscal year 2025, petrol production rose by 4.5%, and high-speed diesel output increased by 7.85% compared to the same period last year.
However, the industry faces challenges due to changes in the sales tax regime introduced by the Finance Act 2024. The shift from zero-rated to exempt supplies for petroleum products like petrol, high-speed diesel, kerosene, and light diesel oil has led to higher operational and capital expenditures, impacting the financial viability of the planned upgrades.
Finance Minister Aurangzeb acknowledged these concerns and assured the refinery executives that the government would carefully review the tax policy changes to support the growth and modernization of the domestic refining sector.
