imposition of petroleum and carbon levies in the current fiscal year’s finance bill, with the government allowing a refinery to ship 45,000 metric tonnes in September.
The Oil and Gas Regulatory Authority (Ogra) authorised Cnergyico refinery to export 45,000 tonnes this month, according to an official notification. Pakistan Refinery Limited (PRL) has already exported 50,000 tonnes of furnace oil.
Officials confirmed that nearly 95 per cent of furnace oil produced in the country is now being exported, as the petroleum levy has made domestic consumption commercially unviable. Industry sources said the decision was aimed at preventing refineries from shutting down due to storage constraints. With the power sector largely shifting towards alternative fuels, furnace oil-based generation is now used only as a last resort.
Exporting furnace oil helps refineries ease inventory pressure and continue operations in other critical product lines such as petrol and diesel. “If furnace oil stocks are not cleared, refineries face the risk of partial shutdowns, which could disrupt supplies of other essential fuels,” one industry representative noted.
They added that the imposition of petroleum and carbon levies has dried up local sales, resulting in a loss of sales tax revenue rather than generating additional income. More consignments are expected to be shipped in the coming weeks, with the global market absorbing Pakistan’s exports at competitive rates, although margins remain slim due to higher freight costs.
While furnace oil consumption had already been declining in power generation, the new levies further discouraged domestic use and paved the way for increased exports. Industry representatives cautioned that although exports offer short-term relief, the long-term future of furnace oil production is uncertain. “Pakistan’s refining sector is under pressure to modernise and upgrade. With global demand for furnace oil declining amid a transition to cleaner fuels, continuous reliance on exports is not a sustainable strategy,” they said.
In the last financial year, Pakistan exported over 1.4 million metric tonnes of furnace oil. The oil industry has warned that the levies could raise domestic prices by more than 80 per cent. “This levy, in addition to the climate support levy of Rs2,665 per metric tonne, poses a serious threat to the overall business environment,” the industry warned.
