Islamabad, Dec 12: In order to expedite the $5–6 billion refinery upgrading projects in Pakistan, the federal government has chosen to temporarily increase the inland freight equalization margin (IFEM) on gasoline, diesel, kerosene, and light diesel oil by Rs. 2.5 per liter. In order to finance the improvement initiatives, this increase will be transferred into ESCROW accounts. According to a national newspaper, this change is merely a stopgap measure until the next government budget.
The Petroleum Division will draft a statement for the approval of the Economic Coordination Committee (ECC) after the Oil and Gas Regulatory Authority (OGRA) has been entrusted with evaluating the effects of the IFEM hike.
Parco has called the IFEM rise an ad hoc solution in opposition to it. It stated that as refineries are now unable to sign implementation agreements with OGRA because of the sales tax exemption on petroleum products imposed in the FY25 budget, the government should address the sales tax anomaly in the next budget. The refineries have lost $1.152 billion as a result of this exemption, which has also damaged a $1.65 billion incentive package. According to refineries, the projects are no longer financially feasible or sustainable as a result of the sales tax adjustments.
