Incentives proposed for refineries in new policy 'blocked' by ministers

ISLAMABAD: Minister for Planning, Development and Special Initiatives, Asad Umar, and Minister for Maritime Affairs, Ali Zaidi, are said to have "blocked" incentives proposed for the existing and new refineries in the new Pakistan Oil Refining Policy 2021, well-informed sources told Business Recorder.

On August 20, 2021, the Petroleum Division presented the draft Pakistan Oil Refining Policy to the CCoE.

The draft policy claimed to provide incentives for upgradation of existing refineries to produce Euro-V specification products as well as encourage potential investors to establish new, state of the art, deep conversion refineries through fiscal support.

The draft Pakistan Oil Refining Policy 2021, along with its fiscal and tariff incentive package, was submitted to the CCoE for consideration and approval.

The meeting held a threadbare discussion on the draft policy. Ministry of Maritime Affairs pointed out that the business of Single Point Mooring (SPM) pertained to it and a policy related to SPM was presently being deliberated upon by the stakeholders.

It was further pointed out that fiscal incentives, proposed in Pakistan Oil Refining Policy 2021, would be at the cost of Sea Ports, therefore, Ministry of Maritime Affairs did not recommend such incentives proposed in the draft policy.

The Chairman CCoE, Asad Umar, also expressed his concern over the proposed upfront availability of tariff protection incentives to the existing refineries for upgradation. He argued that this incentive should be granted after the Commercial Operation Date (COD) of projects. He also observed that monitoring/ governance mechanism suggested for utilization of the proposed tariff protection incentive should be simplified to minimize the role of government.

After a detailed discussion, the CCoE directed the Petroleum Division to review the policy with reference to the following specific points/observation highlighted by the forum: (i) availability of upfront tariff protection incentives to the existing refineries for upgradation; (ii) simplification of monitoring /governance mechanism suggested for utilization of the proposed tariff protection incentives to minimize the role of government; and (iii) treatment of the tariff protection incentives during the period from July 1 to December 31, 2021. The Petroleum Division will submit the revised draft Policy after incorporating viable recommendations therein on the above observations to the CCoE for consideration.

Copyright Business Recorder, 2021