Thursday September 28, 2023

Govt amends export policy to facilitate oil trade by foreign suppliers

September 09, 2023

KARACHI: The government has amended export policy to allow re-export of crude oil and petroleum products imported on foreign suppliers’ account from customs bonded storage facilities.

The new policy allowed foreign suppliers of crude oil and petroleum products to import their products on their own account, without the need for a local importer. This new policy, which was approved by the Economic Coordination Committee (ECC) on June 27, 2023, is intended to make it easier for foreign suppliers to bring their products into Pakistan and to help reduce the country's reliance on imported oil.

The move is aimed at facilitating the import of crude oil and petroleum products by foreign suppliers or their subsidiaries, who can store them in private or public bonded warehouses approved by the customs authorities and the Oil and Gas Regulatory Authority (OGRA), without the requirement of electronic import form or financial instrument, the Ministry of Commerce said in a notification.

The products can be stored in the bonded warehouse for up to five years without having to pay customs duty.

To be eligible for the new policy, foreign suppliers must be registered with the Federal Board of Revenue (FBR) as an importer and exporter. They must also have a subsidiary company registered in Pakistan that will be responsible for the day-to-day operations of the bonded warehouse.

The products imported under the new policy must meet the quality standards set by the OGRA. They must also be cleared by the Hydrocarbon Development Institute of Pakistan (HDIP) before they can be released from the bonded warehouse.

The supply of crude oil and petroleum products from the bonded facilities to the local refineries and oil marketing companies will be governed by the relevant provisions of the Import Policy Order 2022 and all other rules and regulations in force, the ministry added.

Re-export of crude oil and petroleum products from the bonded facilities will also be allowed without the requirement of electronic export form or financial instrument, subject to compliance with the policy guidelines issued by the Petroleum Division, including a 15-day advance notice to OGRA and the oil industry, the notification said.

The government notified the guidelines for import of crude oil on foreign suppliers’ account through custom bonded storage facilities on September 1, after the Economic Coordination Committee of the cabinet approved them on June 27 and the federal cabinet ratified them on June 28.

Pakistan is heavily dependent on import of deficit petroleum products due to limited local refinery supplies, according to the policy guidelines.