KARACHI: The chief executive officers (CEOs) of leading oil refineries on Monday called on Finance Minister Muhammad Aurangzeb and discussed with him investment plans, including multi-billion-dollar plant upgrades aimed at enhancing the domestic production capacity of petrol and diesel.
Pakistan produces some petrol and diesel domestically, but it is not sufficient to meet the country’s total demand. The country imports significant quantities of crude oil and refined petroleum products to supplement domestic production. Pakistan’s five oil refineries have a combined capacity to process 450,000 barrels of crude oil per day.
In the first four months of fiscal year 2025, petrol production was up by 4.50 percent and high-speed diesel by 7.85 percent, compared to the same period last year. This increase is attributed to rising demand in the transport and agriculture sectors.
On Monday, a delegation a CEOs of top oil refineries briefed the finance minister and his team on their upcoming investment plans, which include multi-billion-dollar plant upgrades aimed at enhancing domestic production.
“The delegation highlighted that these upgrades, once implemented, have the potential to save the country close to $1 billion annually in foreign exchange by reducing reliance on imported refined fuels,” a statement from the finance division said.
The refinery representatives also raised concerns regarding the change in the sales tax regime on petroleum products, specifically the shift from zero-rated to exempt supplies.
“They explained that this change has led to a significant increase in both operational and capital expenditure for the refining sector, adversely impacting the financial viability of their planned upgrades,” the statement added.
This change in the sales tax regime, introduced by the Finance Act 2024, means that certain petroleum products like motor spirit (petrol), high-speed diesel, kerosene, and light diesel oil are now exempt from sales tax instead of being zero-rated. This change has raised concerns from refineries, who worry about increased operational and capital costs due to the disallowance of input sales tax claims.
Aurangzeb assured the CEOs that the government would carefully review their concerns, especially those relating to the sales tax exemptions, and added that the issue would be addressed in a manner that supports the continued growth and modernization of the domestic refining industry.
“The meeting concluded with a reaffirmation of the government’s commitment to enabling long-term investment in the energy sector and promoting sustainable industrial development,” the finance division said.
Pakistan imported 137,000 barrels per day of crude in 2024, mostly light grades from the Middle East, with Saudi Arabia and the United Arab Emirates among its top suppliers, data from analytics firm Kpler showed. Oil imports amounted to $5.1 billion in 2024, data from Pakistan’s central bank showed.
In February, Saudi Arabia, through the Saudi Fund for Development (SFD), extended a $1.2 billion financing facility to Pakistan for the import of oil products for a year.
The SFD has provided approximately $6.7 billion to Islamabad for oil products since 2019.
Pakistan’s top oil refineries push ahead with investments, plant upgrades to boost domestic production
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Pakistan’s top oil refineries push ahead with investments, plant upgrades to boost domestic production
- CEOs of refineries call on Finance Minister Muhammad Aurangzeb to discuss investment plans
- Oil imports amounted to $5.1 billion in 2024, April data from Pakistan’s central bank showed
IMF hails Pakistan privatization drive, calls PIA sale a ‘milestone’
- Fund backs sale of national airline as key step in divesting loss-making state firms
- IMF has long urged Islamabad to reduce fiscal burden posed by state-owned entities
KARACHI: The International Monetary Fund (IMF) on Saturday welcomed Pakistan’s privatization efforts, describing the sale of the country’s national airline to a private consortium last month as a milestone that could help advance the divestment of loss-making state-owned enterprises (SOEs).
The comments follow the government’s sale of a 75 percent stake in Pakistan International Airlines (PIA) to a consortium led by the Arif Habib Group for Rs 135 billion ($486 million) after several rounds of bidding in a competitive process, marking Islamabad’s second attempt to privatize the carrier after a failed effort a year earlier.
Between the two privatization attempts, PIA resumed flight operations to several international destinations after aviation authorities in the European Union and Britain lifted restrictions nearly five years after the airline was grounded following a deadly Airbus A320 crash in Karachi in 2020 that killed 97 people.
“We welcome the authorities’ privatization efforts and the completion of the PIA privatization process, which was a commitment under the EFF,” Mahir Binici, the IMF’s resident representative in Pakistan, said in response to an Arab News query, referring to the $7 billion Extended Fund Facility.
“This privatization represents a milestone within the authorities’ reform agenda, aimed at decreasing governmental involvement in commercial sectors and attracting investments to promote economic growth in Pakistan,” he added.
The IMF has long urged Islamabad to reduce the fiscal burden posed by loss-making state firms, which have weighed public finances for years and required repeated government bailouts. Beyond PIA, the government has signaled plans to restructure or sell stakes in additional SOEs as part of broader reforms under the IMF program.
Privatization also remains politically sensitive in Pakistan, with critics warning of job losses and concerns over national assets, while supporters argue private sector management could improve efficiency and service delivery in chronically underperforming entities.
Pakistan’s Cabinet Committee on State-Owned Enterprises said on Friday that SOEs recorded a net loss of Rs 122.9 billion ($442 million) in the 2024–25 fiscal year, compared with a net loss of Rs 30.6 billion ($110 million) in the previous year.
