Cnergyico, the biggest refiner in Pakistan, is set to hike its exports of fuel oil by up to 40% in the fiscal year to June 2026 as higher domestic taxes on the fuel are crippling sales in the country, Cnergyico’s vice chairman Usama Qureshi told Reuters on Thursday.
This summer, Pakistan hiked the fuel oil taxes in the Finance Act 2025-26, effectively raising the tax on fuel oil sales by around 40%. This is on top of an 18% consumption tax on fuel oil.
The oil industry in the world’s fifth-most populous country has urged the government to withdraw the petroleum levy (PL) and climate support levy (CSL) on furnace oil, or fuel oil, citing threats to industrial activity and economic stability.
The Oil Companies Advisory Council (OCAC) of Pakistan has warned that the new charges would hike prices by nearly 80%, making the fuel unaffordable for key industries such as cement, textiles, glass, shipping, tire manufacturing, foundries, and general trade.
The council has also warned that the hiked taxes could reduce overall sales tax revenues, instead of increasing government proceeds, as intended by the new tax provisions.
As a result of shrinking local sales, Cnergyico has been exporting 95% of its fuel oil production since July, compared to 55% in the previous fiscal year that ended in June, Qureshi told Reuters in an interview.
“We will be importing more sweet crude and upgrading the refinery to produce cleaner diesel and gasoline, and also plan to set up fuel oil cracking facilities to boost gasoline production,” Qureshi said.
So far, Cnergyico has imported predominantly sour crude with high sulfur content from the Middle East.
But in August, Qureshi said that Cnergyico would import Pakistan’s first U.S. crude oil cargo in October following the trade and energy cooperation deal the two countries signed in late July.
By Tsvetana Paraskova for Oilprice.com
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