ISLAMABAD: The Pakistan Petroleum Exploration and Production Companies Association (PPEPCA) on Thursday warned that the imposition of super tax could affect the financial viability of exploration and production (E&P) companies and undermine Pakistan’s decades-long efforts to attract foreign investment in the oil and gas sector.

In a two-page letter to Special Investment Facilitation Council (SIFC) Secretary Jamil Ahmad Qureshi, the association said foreign and even local investors would be reluctant to commit billions of dollars to high-risk, long-term upstream projects if foundational fiscal terms could be altered unilaterally.

It said investors accepted such risks because petroleum concession agreements (PCAs) provided fiscal stability, and that removing this certainty retrospectively would be “fundamentally unfair” and economically unviable.

The association’s concerns come as the Federal Constitutional Court (FCC) hears appeals arising from judgements of the Sindh, Lahore and Islamabad high courts on the levy of super tax through Sections 4B and 4C of the Income Tax Ordinance, 2001, through the Finance Act, 2015.

Ask SIFC to intervene, cite fiscal stability clauses in petroleum concession agreements

The super tax was introduced in 2015 through a money bill, with the stated purpose of financing the rehabilitation of areas affected by Operation Zarb-i-Azb.

The letter, signed by PPEPCA Secretary General Ibrar Khan and also sent to the Ministry of Energy (Petroleum Division) and Additional Attorney General Munawar Iqbal Duggal, said PCAs contain dispute resolution clauses that allow for international arbitration.

The association cited the Reko Diq and Karkey disputes, stressing that Pakistan had faced heavy financial liabilities in cases linked to alleged violations of legal protections and contractual commitments.

“If the federation insists on imposing a super tax at rates above those set out in statutorily protected PCAs, then there is a distinct possibility that at least some of the association members may invoke the dispute resolution clauses,” the letter said.

As a result, “the potential liability could run into billions of dollars, further straining Pakistan’s already precarious fiscal position, damaging the sovereign credit rating, discouraging all future FDI (foreign direct investment) and undermining Pakistan’s reputation in international capital markets,” it added.

The letter said the government had taken decisions “at the highest level” to encourage foreign and multinational investment in Pakistan’s oil and mineral resources, and warned that any perception that statutory and contractual assurances to E&P companies could be disregarded would harm those plans.

The association urged the SIFC to intervene to ensure the government honoured these “legally binding obligations”, saying each day the matter remained unresolved increased the risk of international arbitration and damaged Pakistan’s standing.

Published in Dawn, January 9th, 2026