Shedding crocodile tears?

The gloomy picture painted by Pakistani refiners must have won the sympathies of the petroleum minister by now. The letter sent to Naveed Qamar by the big shots of the oil refinery industry warns that high outstanding amount of receivables and unfair pricing formula will leave them with no option but to curtail their operations. But theirs isn exactly a sob story.
Agreed that refineries are a victim of inter-corporate circular debt that hasn been done away with as yet despite numerous claims by the government; but thats just one side of the story. A closer look into their books reveals a different picture: refiners owe more to others than the other way round.
According to the latest numbers, the top three listed refineries - NRL, ATRL and PRL - have receivables worth Rs45 billion against payables of a staggering Rs78 billion, which leaves them net debtors of Rs33 billion. So, in essence, they are the ones who are adding woes to the system than being on the receiving end as their payables to OGDC, PPL and other oil producing entities are on a much higher side than their receivables from PSO and others.
"Fast depleting reserves and uncertainly of profitability in the future calls for a revision in pricing formula", read the jointly signed CEOs letter. Refiners cite falling reserves as the main reason behind their inability to upgrade their plants as per government deadlines.
But, the depletion of reserves is just a recent phenomenon and compared with the quantity accumulated over the last many years, the 5-percent drop in reserves in the first quarter of fiscal year 2010 looks a non-event in the larger context.
Even after incorporating the 14-percent dip last year, refineries have managed to quadruple their reserves in a span of five years, from Rs7.5 billion in FY04 to Rs28 billion in FY09. And given that the refineries barely invested a penny in all those years when their reserves were on the rise, the worries over the implementation of Euro-II due to 14 percent decline in FY09 seem more like crocodile tears.
As for the revision in price formula, here is a BM course 101 for refinery bosses: usinesses anywhere in the world are supposed to carry the risk of the unseen. So, it is absurd that any ambiguity over future earnings should make a case for chop and change of established price regulations. Besides, looking at the global oil price forecast refineries should not feel as uncertain as they are about their future anyways.
In fact, what needs to be done is to abolish deemed duty entirely instead of increasing it to 10 percent as asked by the refineries. Refineries have made billions of rupees ever since the introduction of deemed duty without ever investing to properly implement environment friendly Euro-II standard. It isn that making money is wrong but that should not be done at the expense of the end consumer by charging him for Euro-II up gradation, which, apparently, isn taking place.
The reason why refineries are unable to reap better refining margins is that they have inefficient and old plants that have not been replaced in the last 40 years or so. Even people close to the industry sitting on top ranks are of the view that public should not be made to pay for the liabilities of the refinery - of which the inefficient plants lead the list. Some also accuse the refineries of having formed a cartel - if thats really the case, the ever-busy CCP might want to look into the matter.