ISLAMABAD: The top members of Cabinet Committee on Energy (CCoE) including Minister for Energy, Hammad Azhar, have rejected incentives for existing refineries, saying that paying upfront money, collected from the taxpayers, without having any stake of the Government is not a recommended option, well informed sources told Business Recorder.
Prime Minister Advisor on Commerce and Investment Abdul Razak Dawood more specifically referred to M/s Byco's installed poor quality refinery which made a lot of money by exploiting loop holes in the Government Policy. Therefore, upfront 40% payment without any stake is not recommended.
On September 13, 2021, the Petroleum Division reviewed the CCoE's observations and its item wise response accounted for the following modifications in the draft policy: (i) upfront utilization of incremental tariff protection revenue was previously provided in the Policy from January 1, 2022, however, under the new proposed arrangement this amount can only be used after award of EPC contract by the respective refineries which is expected by start of 2024 (Sub-section 184.108.40.206 of the Policy; (ii) OGRA will monitor the generation of incremental revenue to be deposited in a special reserve account by each refinery under a separate bank account to be opened in NBP and ensure its utilization for the purpose of the upgradation/expansion of the refineries, on proportionate basis of the incremental revenue and refinery's contribution (under the principle of Sub-section 220.127.116.11 of the Policy);(iii) in order to simplify the governance arrangements, the mechanism of hiring of joint external consultant as proposed during the presentation in CCoE's meeting August 20, 2021, has been dropped;(iv) as force majeure is a project specific contractual arrangement hence it has been deleted from the draft Policy (Sub-section 18.104.22.168 (e) of the Policy) and ;(v) previously, bank guarantee worth Rs 500 million per refinery was required till Financial Close. As an abundant precaution, this has been extended till commissioning of the project (COD). The form and features of guarantee wi11 be subject to acceptance by MEPD (Sub-section 22.214.171.124 of the Policy). During the ensuing discussion, Secretary, Petroleum Division informed the forum that the observations of the CCoE on the draft policy, as considered in its earlier meeting, had been addressed. He further elaborated various aspects of the policy. The CCoE appreciated the efforts and hard work carried out by the Petroleum Division in preparation of the draft policy.
Copyright Business Recorder, 2021