ISLAMABAD: A meeting with representatives of the oil refineries has been scheduled in the Petroleum Ministry, hoping it will make headway for a new oil refining policy which could not be finalised during the tenure of the Pakistan Tehreek-e-Insaf (PTI) government, sources in the Petroleum Ministry said.
The PTI administration started working on the new oil refining policy in 2020 but could not finalise it due to differences between the Cabinet Committee on Energy (CCOE) and the Petroleum Division.
According to sources, few of the reservations have been addressed through the budget while some remain unresolved, which are the key to initiating refinery upgrade projects for the production of environment-friendly fuels.
Energy experts say that the new oil refinery policy will pave the way for boosting oil refinery production in the backdrop of diesel shortage in the global market following the Russia-Ukraine war. US sanctions on Russian oil supplies have sparked a rise in global crude oil prices.
State-owned oil marketing giant Pakistan State Oil (PSO) having 52 percent market share has faced trouble in securing diesel import contracts and has managed to import the fuel at higher premiums.
The refineries are counting on the new government, arguing that an oil refining plant could be upgraded with an investment of $4 billion to enhance the production capacity while a new refinery will require an investment of $10 billion.
The refineries operating in Pakistan are called basic refineries, or topping or simple hydro-skimming refineries in technical language, which need to upgrade to produce environment-friendly fuels of Euro-V standard.
Pakistan’s refineries produce 70 percent of the diesel requirement and meet 30 percent of petrol demand.
The oil industry says that the refineries were initially allowed to include customs duty (deemed duty) in the ex-refinery prices of high-speed diesel (HSD) and three other petroleum products but the duty was later restricted to the ex-refinery price of HSD only.
Copyright Business Recorder, 2022
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