The Oil Companies Advisory Council (OCAC) has raised serious concerns over new levies on furnace oil, warning they could push oil prices up by more than 80%. In a letter to the Special Investment Facilitation Council (SIFC), OCAC urged the government to reverse the decision, calling it harmful to industries and national economic interests.
Starting July 1, 2025, a petroleum levy of Rs82,077 per metric ton and a Climate Support Levy of Rs2,665 per ton have been imposed on furnace oil. OCAC Chairman Adil Khattak said this decision, made without consulting the industry, could damage multiple sectors.
Furnace oil is a deregulated fuel, mainly used in industries such as cement, textile, glass, tyre, and shipping. OCAC warned that the new charges would make furnace oil unaffordable for many businesses. If demand drops, refineries may be forced to export furnace oil at a loss, damaging the refining sector.
“These levies will not just raise oil prices—they threaten jobs, industrial output, and energy production,” the OCAC letter stated.
The advisory council also highlighted that these price hikes could cause shutdowns in industries that rely on boilers and furnaces. Independent Power Producers (IPPs) that run on furnace oil would also be hit hard, despite recent efforts to reduce their tariffs.
OCAC appreciated SIFC’s earlier support in resolving past tax issues through the Inland Freight Equalization Margin. However, it stressed that this was only a temporary fix and not a long-term solution.
The council urged the government to restore the taxable status of other petroleum products like petrol, high-speed diesel, kerosene, and light diesel oil to balance revenue without burdening furnace oil users.
OCAC believes the levies will not generate expected revenue. Instead, they may reduce furnace oil sales and hurt industrial competitiveness. It called for urgent intervention from SIFC to help protect the economy from the damaging impact of rising oil prices.
The alarming rise in oil prices comes at a time when Pakistan has made promising strides in energy exploration. Major oil and gas reserves were recently discovered in KP’s Karak district, offering hope for long-term energy stability.
