The CPFTA was renegotiated in Pakistan on January 15 ANI Probe into misuse of petroleum imports from China began in Pakistan, the federal government ordered all oil marketing companies OMCs to provide evidence-based data on the import of petrol from China amid reports of misuse of China-Pakistan Free Trade Agreement CPFTA Under the CPFTA renegotiated in 2019, the Pakistan government had statutory regulatory orders that abolished the import of petrol. With effect from January 1, 2020, there was no customs duty on the import of petrol from China. According to Dawn, normal petroleum imports from all other sources, including the Middle East, attract 10 per cent customs duty, while similar duty is applicable on production from local refineries.
It results in a price saving of about 10 per cent on petrol imports from China. The OMCs retain the price differential as windfall profit rather than the benefit to the exchequer or consumers. The gap usually runs between Rs 9 - 12 per liter depending on the international petrol price published in Platt's Oilgram.
The free trade agreement that was signed on April 28, 2019 was intended to promote fair trade competition.
On the other hand, China is a net importer of petroleum products, including petrol and transportation cost to Pakistan, which is relatively higher than that of the Middle East. This provides a substantial cushion to the OMCs.
The local refineries told the government that domestic production of petrol and high-speed diesel HSD could possibly go up by 60 per cent and 48 per cent, at a significant foreign exchange saving provided the local refineries are operated at optimum capacity.
As money and share markets plummeted last month, Pakistan's oil import bill, particularly refined petroleum products, has been the largest chunk of an increase in imports in the first five months of the current fiscal year, causing unrest among government ranks.