ISLAMABAD: Oil refineries have pocketed Rs500 billion from consumers on account of deemed duty, an incentive provided by the government for upgrading their plants in an effort to produce higher-grade and environment-friendly fuel.
The disclosure was made on Friday in a meeting of the Senate Standing Committee on Petroleum, chaired by Senator Mohsin Aziz.
Refineries have been collecting deemed duty on the sale of petroleum products since 2002 to install upgraded plants for oil refining. So far, they have got four extensions in the deadline for upgrading the plants, but are still receiving the duty.
At present, 7.5% deemed duty is being collected on the sale of high-speed diesel to the consumers.
According to a decision of the Economic Coordination Committee (ECC) taken in March 2013, the refineries, including National Refinery Limited, Pakistan Refinery Limited and Attock Refinery Limited, were required to deposit their profits above 50% of the paid-up capital including the accumulated unutilised balance in a special reserve account.
However, instead of shifting funds to an escrow account, they spent the special reserves on upgrading the refineries.
The Senate committee chairman voiced concern over what he called undue protection provided by the government to the refineries and wanted to know where the money was spent.
He emphasised that the deemed duty was aimed at upgrading the quality of petroleum products, but regretted that hefty collections were made from poor oil consumers. “Public money should be spent on people,” he said.
The petroleum secretary said they were going to address those problems which remained unaddressed over the past one decade. He stressed that they would bring about improvement in oil and gas exploration activities in Balochistan in the next six months.
