Federal government is considering doing away with deemed duty on high speed diesel (HSD) sales as oil refineries have stalled upgradation of their production processes and plants to produce better grade petroleum products, sources said.
Oil refineries are collecting deemed duty at the rate of 7.5 percent on total HSD sales since 2002 without upgrading their plants or depositing in government accounts.
This is not the first time the authorities are considering the scrapping of the deemed duty on HSD sales. The purpose for the deemed duty being collected by the refineries has largely remained unfulfilled despite multiple extensions in the deadline. The last approval was accorded on 3 April 2016 by the ECC led by Ishaq Dar for a period of 18 months which expired on 2 September 2017. Former Prime Minister Shaukat Aziz initially approved the deemed duty at the rate of 7.5 percent on indigenous HSD in 2003-04 for an indefinite period
Local refineries have charged an estimated amount of Rs 290 billion from consumers during the last 15 years under the head of deemed duty - a Senate Standing Committee on Petroleum which met here in the chair of Senator Mohsin Aziz on May 21, 2019 was informed.
The standing committee wanted to refer the matter of collection of deemed duty by oil refineries to FIA and Auditor General of Pakistan for a probe.
The matter was again discussed in the meeting held between the Managing Directors (MDs) of five refineries that include National Refinery Limited (NRL), Attock Refinery Limited (ARL), Pak-Arab Refinery (PARCO), Attock Refinery Limited (ARL) and BYCO in a with Special Assistant to PM on Petroleum Nadeem Babar on Thursday (April 23).
Refineries had submitted a proposal for up-gradation for which incentives were also sought from the government but during the meeting with the Special Assistant, refineries stated that up-gradation is totally irrelevant at this juncture as they are not even able to survive with current level of losses.
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