Govt, oil sector in tracking system row

The government and oil industry have entered into a deadlock over the installation of auto tank gauging (ATG) system at petrol pumps to monitor the sale and purchase of petroleum products.

The government wants to set a target of installing 5% ATG at retail outlets and expand the tagging to 100% in a year. The Federal Board of Revenue (FBR) wants to install ATG following the model of the track and trace system installed in industries.

The Oil Companies Advisory Council (OCAC) had written a letter to the Oil and Gas Regulatory Authority (Ogra), saying that the industry could not install ATG system due to the higher cost involved in it.

The government is of the view that the ATG system will pool the entire data of sales and purchases of petroleum products in the country. It will also help tax authorities to check real sales figures and enable the government to check oil stocks across the country.

Federal Minister for Petroleum Ali Pervaiz Malik held a meeting on Wednesday with representatives of the Oil Marketing Association of Pakistan (OMAP) and OCAC to discuss industry recommendations for strengthening and modernising the national petroleum supply chain.

During the meeting, the petroleum minister grilled Ogra for not resolving issues in the oil industry. Representatives of the oil industry discussed the increase in margins on petroleum products and the sales tax exemption that had resulted in a financial hit to the oil sector.

Oil industry representatives said that the government had committed to increasing oil companies' margins, but these have not been increased yet. Oil refineries took up the matter of sales tax exemption. The oil industry had faced a loss of Rs34 billion last year due to sales tax exemption. The government had committed to imposing sales tax up to 5%, but it did not enforce it in the budget, which upset the industry.

During the meeting, the oil industry demanded that the government allow them to recover losses due to sales tax exemption being incurred during the ongoing financial year.

OCAC Chairman Adil Khattak in a letter to Ogra chairman expressed concern that the meeting proceeded largely as a monologue by Ogra. Despite multiple attempts by OCAC to present the industry's position, its requests to speak were disregarded.

Nonetheless, it is important to clarify that the industry fully supports the digitisation initiative and remains committed to its successful implementation. "We have repeatedly requested that a phased implementation timeline be provided for retail outlet digitisation and ATG installation, supported by a viable cost recovery mechanism to be finalised by Ogra. Given the scale of the task and the total number of retail outlets nationwide, the industry requires a realistic implementation window of at least five years to execute this transition effectively," he said and reiterated that the ATG system is a capital-intensive, high-complexity initiative.

Each ATG unit is custom-built according to specific tank configurations and requires substantial lead time for procurement, installation, integration, and calibration.