ISLAMABAD: The government of Pakistan has been collecting a “deemed duty” on petrol and diesel for many years. This duty has been included in Petrol prices and has generated billions of rupees for local oil refineries.
The policy was originally introduced in 2000. According to analysts, it was planned as a temporary measure for only three years. The main goal was to support domestic refineries. The funds were meant to help them upgrade technology and improve fuel production standards.
During a program on Khabar, host Muhammad Malick discussed the issue in detail. He said that the policy has continued for decades despite its initial short-term plan. Malick stated that by 2022, around Rs300 billion had already been provided to refineries through this mechanism.
He also raised concerns about how effectively the money was used. According to him, questions remain about whether the funds were fully spent on upgrading refinery facilities.
Federal Minister for Petroleum Ali Pervaiz Malik responded to the concerns during the discussion. He explained that a portion of the current Petrol prices includes deemed duty. This duty is around Rs7.5 per litre on both petrol and diesel.
The minister said the collected amount is provided to local refineries. The purpose is to help them modernize their systems and increase production capacity. Upgraded refineries can also meet international environmental and fuel quality standards.
Malik further explained that the policy was adjusted during the previous government’s tenure. At that time, the duty was increased from Rs7.5 to Rs10 per litre. The increase was incorporated into the overall fuel pricing structure.
He added that the collected funds will be placed in a special escrow account. The money will be used specifically for refinery upgrades. Authorities believe this will also help reduce environmental pollution caused by outdated refining systems.
Experts describe deemed duty as a financial incentive for domestic refineries. It is designed to strengthen the country’s refining sector and improve fuel quality.
However, officials clarified that the deemed duty was not a direct reason behind the recent Rs55 rise in Petrol prices. The increase was linked to other economic and market factors.
In other news read more about KP Government Implements Fuel Conservation Measures Amid Rising Petrol Price Concerns
The discussion has sparked debate about transparency and the effectiveness of the policy. Some analysts believe stronger monitoring is needed to ensure the funds are used for their intended purpose.
