The Executive Committee of the Special Investment Facilitation Council (SIFC) on Wednesday directed the Petroleum Division to devise a way forward within a week to kickstart $5-6 billion worth of upgrade projects for local refineries.
The committee meeting was chaired by Federal Minister for Planning and Special Initiatives Ahsan Iqbal.
Authorities have decided to increase the inland freight equalisation margin (IFEM) by Rs2.5 per litre on petrol, diesel, kerosene, and light diesel oil. The additional revenue will be shifted to ESCROW accounts, allowing refineries to utilise the funds under an incentive package.
The amount would be used for upgrade projects. However, this would be a temporary arrangement till the next budget.
In the SIFC meeting, Ogra has been asked to work out the impact of increase in IFEM and to this effect a summary would be prepared by the Petroleum Division that would be pitched before the ECC for approval.
However, Parco that holds 48% market share is not in favour of increasing the IFEM saying it is an ad hoc arrangement. It says the government is required to do away with the anomaly of sales tax through the budget.
This middle way, the official said, has been found after the failure of the government to resolve the issue of sales tax exemption on POL products imposed in the budget for FY25.
This has barred the refineries from signing the implementation agreement with Ogra which is mandatory prior to initiating their respective upgrade projects of $5-6 billion.
