FBR restores duty on diesel, LNG import after refineries protest

KARACHI: The government has rationalized customs duties on the import of High Speed Diesel (HSD) and natural gas with regulatory duty.

The decision was taken after the country’s five refineries raised fears of permanent closures if custom duties on the import of HSD are reduced to zero percent, as proposed in the budget for the next financial year.

The Federal Board of Revenue (FBR) communicated with the refining sector through the Ministry of Energy on Friday that the duty structure has been rationalized with a view to reduce the overall cost of exemption on the import of HSD and natural gas. In their letter to the Petroleum Division, the five refineries said: “The unilateral proposal to reduce deemed duty on HSD at zero per cent will ultimately lead to the permanent closure of the refinery sector in Pakistan when it is already fulfilling more than 60 per cent of the country’s total petroleum products and would not only serve the ulterior motives of vested parties/import lobbies but also defeat the essence and spirit of refineries policies approved by the government.”

The Finance Bill 2024-25 tabled in the National Assembly on June 12, 2024 proposes certain changes for the import of HSD falling under Chapter 27 of the Pakistan Customs Tariff (PCT) under the First Schedule and Fifth Schedule of the Customs Act, 1969.

The existing customs duty on HSD imports is 10 per cent, and this has been proposed to be brought to zero per cent under the Finance Bill 2024-25.

The refineries’ letter stated that last year, the government approved ‘the Pakistan Oil Refining Policy for New/Greenfield Refineries, 2023’ and the ‘Pakistan Oil Refining Policy for Upgradation of Existing/Brownfield, 2023’.