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Incentives for refineries not approved by CCoE

ISLAMABAD: The Cabinet Committee on Energy (CCoE) is said to have not approved incentives for the refineries due to...
Published September 14, 2021
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Islamabad: The Cabinet Committee on Energy (CCoE) is said to have not approved incentives for the refineries due to Byco refinery whose technology is 20 years old, well-informed sources told Business Recorder.

“There is no issue of other four refineries but Byco’s plant is 20-year old. Finance Minister Shaukat Tarin opposed it on the basis of information given to him,” the sources said, adding that Commerce Advisor Abdul Razak Dawood argued that the government should have shares in M/s Byco in lieu of incentives proposed by the Petroleum Division.

According to sources, SAPM Tabish Gauhar, who has altered the draft prepared by his predecessor Nadeem Babar was visibly disturbed at the CCoE’s decision on the Refineries Policy.

“The main beneficiary of the proposed incentives was M/s Byco compared to other four refineries, ie, Pakistan Refinery, National Refinery, Parco and Attock Refinery,” the sources continued.

CCoE to take up refining policy on Monday

An official statement issued by the Ministry of Planning, Development and Special Initiatives, the CCoE approved the Pakistan Oil Refinery Policy 2021 in principle with directions to Petroleum Division to revisit the upfront incentive package offered to the existing refineries in the country.

Petroleum Division presented the summary of Pakistan Oil Refinery Policy 2021 for approval of CCoE. The proposed policy was discussed in detail. The chairman of the Committee appreciated the work and efforts of the Petroleum Division and of the highly knowledgeable and experienced professional involved in the formation of this policy. The CCoE approved the Pakistan Oil Refinery Policy 2021 in principle. However, it directed Petroleum Division to revisit the upfront incentive package offered to the existing refineries in the country.

An energy sector expert said that without incentives, approval of Pakistan Oil Refineries Policy is simply a non-starter.

The CCoE also approved the final report of the Implementation Committee and directed the Power Division to proceed with the payments of all 11 IPPs as per the signed agreement except a company whose cases are under investigation by National Accountability Bureau (NAB). The government will pay 40 per cent as first installment of total agreed amount to 11 IPPs, which will be roughly Rs 95 billion after withholding Rs 8.6 billion of Nishat Chunian.

The Power Division submitted a report of the Implementation Committee on the ratification of the IPPs Agreement, under the 2002 Power Policy. After detailed discussion, the Committee approved the final report of the Implementation Committee and directed the Power Division to proceed with the payments of all 11 IPPs as per the signed agreement except Nishat Chunian.

The IPPs established under 2002 policy are jubilant on approval of 40 per cent of agreed amount as first installment. The prime intelligence agency, which played a key role in signing of agreement with the IPPs, has again requested the decision makers to honour the commitment.

The CCoE also approved supply of electricity at Rs 12.66/kWh country-wide on incremental consumption for four months of winter season starting from November 1, 2021, to be available to Time of Use (ToU) and non- ToU domestic and commercial consumers.

Oil refining policy may be approved by CCoE on Friday

Power Division has submitted the following proposals: (i) rate of Rs 12.66 kWh shall be charged to domestic consumers (non-ToU) on incremental consumption, above monthly 300 units or above the reference consumption in the corresponding months of reference period, whichever is greater; (ii) rate of Rs 12.66/kWh shall be charged to commercial consumers (non-ToU) and General Services consumers on the incremental consumption above the reference consumption in the corresponding months of reference period; (iii) rate of 12.66 Rs/kWh shall be charged to domestic consumers (ToU) and commercial consumers (ToU)) on the respective peak/off-peak incremental consumption, above the reference peak/off-peak consumption in the corresponding months of reference period; (iv) new and existing consumers having no reference consumption available in period of November 2020 to February 2021 shall be offered the same package at the concessionary rate of 12.66 Rs/kWh through benchmark consumption methodology; (v) no quarterly adjustments would be applicable on incremental consumption; and (vi) on incremental consumption, only positive fuel price adjustments shall be passed to consumers availing the incremental consumption package.

According to the Power Division, incremental consumption is subsidy neutral. Under the prevailing dynamics of energy sector, overall savings in monthly bills of consumers are anticipated if the package is offered to the consumers in the winter season. The CCoE directed winter incentive package for electricity consumers should be implemented in KE.

The Committee also directed Petroleum Division to submit an inverse gas pricing mechanism for the same months within this week.

The meeting was attended by Minister for Finance, Minister for Energy, Minister for Maritime Affairs, Minister for Railway, SAPM on Power, Petroleum & Revenue. Adviser for Commerce and Investment to Prime Minister. Representatives of regulatory authorities and senior officials of Ministries/Divisions also participated in the meeting.

Copyright Business Recorder, 2021

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