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ISLAMABAD: Conceding to the key demands of the private sector oil refineries, the Cabinet Committee on Energy (CCoE) on Tuesday approved amendments to the Brownfield Refineries’ Policy to ensure the upgrade of the existing refineries within six years capable of producing Euro-V petrol and diesel, with minimal production of low-quality fuel like furnace oil.
The meeting presided over by Minister for Petroleum and Power Muhammad Ali accepted four major demands of the four private sector refineries — Attock, National, Pak-Arab and Cynergico — stalling the implementation of refining policy since August 22, 2023, the date of its notification. Pakistan Refinery Ltd — a government-owned entity immediately signed the contract last year and started project implementation.
These amendments mean a continuation of 7.5pc deemed duty on locally refined products for 20 years (instead of six years) or till the deregulation of oil pricing whichever is earlier in line with similar facilities to investments for new refineries. Also, the upgrade agreement between the Oil and Gas Regulatory Authority (Ogra) and the refineries would be signed within 60 days instead of the previous deadline of one month. Moreover, the capping on funding from an escrow account for the refinery upgrade project on used equipment has now been increased to 24.5pc from 22pc in the August 2023 policy. This incentive is slightly lower than the 27.5pc discount for new equipment. Moreover, the policy implementation committee would now comprise federal secretaries for petroleum, finance and law.
Oil Companies Advisory Council (OCAC) welcomed the amendments and hoped it would be approved and ratified by the federal cabinet in the next few days. OCAC Chairman Adil Khattak said the refineries’ upgradation will bring in $5-6bn investment and not only result in cleaner environment-friendly fuels but also major savings of precious foreign exchange.
Amend PDM’s policy, extending deemed duty on products to 20 years
“The Refineries Upgradation Policy would surely be termed as the most important achievement of the caretaker government and it is hoped that it would be implemented in its true letter and spirit,” he said.
It is rare that a policy already approved by an elected government and notified by the interim setup was amended within a few months and just before the return of another elected government.
Mr Khattak said the core challenges the country faced at present in the economic sector stemmed from “ill planning and mismanagement of the energy sector”. This badly-needed policy took more than four years in the making and final approval was delayed on one pretext or another. The policy was finally notified on Aug 17, 2023 but unfortunately had some anomalies which were not acceptable to the refineries, he recalled, adding the amended policy will now enable the refineries to undertake major upgradation projects to comply with Euro-V specifications and increase production of deficit products of petrol and diesel by 99pc and 47pc respectively. This will reduce the production of furnace oil by 78pc.
Published in Dawn, February 7th, 2024
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