Clarification

This is with reference to the news item titled "Govt mulling doing away with deemed duty on HSD sales" published in Business Recorder dated April 28, 2020 whereby it has been stated that Federal Government is considering removing deemed duty on high speed diesel attributing it to local refineries having stalled their future up gradation projects to produce better grade petroleum products.

"At the very outset, oil refineries in Pakistan strongly refute the above impression as stated in the press item. It may be noted that the refineries are fully committed to undertaking and upgrading their respective refineries and the same have been communicated to the government.

"It is totally incorrect to declare that huge amount of money has been charged to the consumer on account of deemed duty on HSD and no up-gradation of refineries has taken place.

"The Government of Pakistan withdrew Guaranteed Rate of Return Pricing Formula (10%- 40%) for the Refineries with effect from July 01, 2002 and had allowed 10% deemed Duty on HSD, 6% on Kerosene Oil, Light Diesel Oil and JP-4, respectively with the prime objective of running the refineries on self-sustainable basis without any government support/subsidy. Subsequently, effective August 01, 2008 "Deemed Duty" on HSD was further unilaterally reduced to 7.5%, while "Deemed Duty" on three products (Kerosene, LDO and JP-4) was also totally abolished with effect from June 10, 2007.

"In line with the spirit of the various government directives and subsequent policy framework, the refineries has invested heavily in their Up- gradation and Expansion projects without any support/subsidy from GOP. This includes capacity enhancement, setting up Isomerization & Diesel Hydro Desulfurization (DHDS) Units and are producing Euro II specifications projects.

"All these facts and figures have been duly explained to various forums including Senate Committee who showed satisfaction and requested for a road map including finalization of Downstream Policy for continuation of reforms in Pakistan Refining Sector. The current government is also keenly reviewing the way forward to support the refining industry and provide a policies to allow upgrade of the refineries to meet future challenges with ultimate benefit for the consumer.

"Unfortunately, due to Corona Pandemic which has seriously affected the entire world including Pakistan, the refineries have requested for deferring discussion on these projects till they come out of the current crisis arising of this pandemic and have requested for a bailout package for an interim period of time.

"It also needs to be appreciated that the refineries in Pakistan are strategic assets of our country and their sustainability and continuity is essential for the prosperity and economic development of Pakistan."-PR