Government plans to rename deemed duty as processing fee

After replacing petroleum development levy (PDL) with carbon surcharge on petroleum products, the government is planning to give cover to the much criticised “deemed duty” for oil refineries and rename it as “processing fee.” Sources revealed to the Business Recorder on Wednesday that the sub-committee of the Economic Co-ordination Committee (ECC) of the Cabinet had decided to increase deemed duty from current 7.5 percent to 10 percent, placing an upper cap at 80 dollars per barrel crude oil in the international market for oil refineries. Oil refineries have been enjoying the 10 percent deemed duty since 2002 that was reduced to 7.5 percent on July 31, 2008 when the oil prices shot up to 147 dollars per barrel in the international market. The deemed duty was given to oil refineries to establish desulphuration plants, aimed at reducing sulphur content from one percent to 0.05 percent in high speed diesel (HSD) for the oil refineries. According to sources, the Finance Ministry has agreed to provide financing for the projects to the oil refineries and the sub-committee also endorsed financing for desulpheration projects. ARL, PRL, NRL, Bosicor and Parco earned profit, amounting to Rs 60.3 billion during the last 10 years. (June 18, 2009)