BOI seeks raw material reserves

Minister proposes extending scope of incentives from oil to other raw goods

ISLAMABAD:

Federal Minister for Board of Investment Qaiser Ahmed Sheikh has asked the country's economic managers to extend the scope of incentives being offered for building strategic oil reserves to other raw materials deemed critical to fetch benefits for the country.

While discussing the import on foreign supplier's account through Customs bonded storage facilities in a recent meeting of the Economic Coordination Committee (ECC), the minister endorsed the proposal to widen the initiative to cover other raw material imports as well.

The Ministry of Energy (Petroleum Division) described the initiative as a non-revenue paradigm shift and expressed hope that it would contribute positively to the country's energy security and build a proactive buffer to cushion against exogenous shocks.

While appreciating the Ministry of Petroleum for taking a timely initiative in the right direction, the ECC discussed in detail the mode of application. The Federal Board of Revenue (FBR) assured the meeting that the process for necessary legislative changes and operational provisions would be initiated in consultation with the Law and Justice Division to make the initiative successful. The Special Investment Facilitation Council (SIFC) also endorsed the proposal.

The Petroleum Division briefed the ECC that policy guidelines on "Import on Foreign Supplier's Account through Customs Bonded Storage Facilities" had been approved by the ECC in June 2023. Subsequently, all the relevant stakeholders issued their standard operating procedures (SOPs), guidelines and rules for implementation of the policy. However, thus far, no foreign supplier has established any bonded storage facility under the policy.

The Petroleum Division mentioned that the ongoing disruption of shipping traffic through the Strait of Hormuz highlighted the vulnerability of Pakistan's energy security and to address the challenge, the division was focusing on the development and strengthening of the key pillars of energy security in the oil and gas sector, which included indigenisation, development of strategic petroleum reserves and promotion of Customs bonded storage facilities to ensure a resilient and sustainable petroleum supply chain.

The division apprised the meeting that the petroleum minister had constituted a committee to review the existing policy guidelines and make specific recommendations for operationalising the policy. The committee held a series of meetings and sought input from major petroleum traders and suppliers. Based on that, a revised draft of the policy guidelines on "Import on Foreign Supplier's Account through Customs Bonded Storage Facilities" was prepared.

The revised guidelines were circulated among the stakeholders concerned on June 15, 2026 including the Ministry of Finance, Ministry of Commerce, Ministry of Industries & Production, Ministry of Maritime Affairs, FBR, State Bank of Pakistan, Oil and Gas Regulatory Authority, Board of Investment (BOI) and SIFC for their views and comments.

The FBR, State Bank, Ministry of Commerce, Ministry of Maritime Affairs, SIFC and BOI conveyed their comments. Based on those, particularly the FBR's views, the proposed guidelines were further amended substantially to address concerns and re-circulated on July 23, 2026 among the stakeholders.

Supporting views and comments were received from the Ministry of Commerce and State Bank. However, the FBR, in its comments, voiced concern over primary clauses. In order to arrive at a consensus, the Petroleum Division held a meeting of the committee, which was attended by all members.

The policy was improved in light of comments of the minister for maritime affairs and Ogra chairman. Comments of the stakeholders, particularly the FBR, were discussed in detail and the FBR reiterated its reservations about certain provisions in light of the prevalent laws such as the Customs Act 1969 and Sales Tax Act 1990.

The Petroleum Division was of the view that to establish bonded storages in the country in the wake of the prevailing geopolitical situation, the proposed policy guidelines were critical for approval and amendments to the relevant laws and respective legal, regulatory and procedural frameworks for implementing the policy.

The Ministry of Energy (Petroleum Division) submitted the final draft of the policy guidelines for consideration and approval of the ECC. The cabinet committee considered the summary titled "Import on Foreign Supplier's Account through Customs Bonded Storage Facilities" and approved the proposal with the directive to initiate the process for the required legislative and procedural amendments.