Change in petrol pricing formula causes serious set back to refineries: CEO ARL

Adil Khattak CEO Attock Refinery Limited has said that government’s latest change in MS/ petrol pricing mechanism causes serious set back to refineries.

The refineries, which had already agreed on two occasions to cap their spread on High-Speed Diesel (HSD) at the government’s request—first at USD 41.89 and subsequently at USD 38—are now confronted with yet another serious loss, this time without even a semblance of consultation.

Read More: Pakistan Revises Petrol Pricing Mechanism for Refineries

The government’s decision to incorporate pre-war premiums and incidentals into the MS pricing mechanism will reportedly cost the refineries approximately Rs 35 per litre. An additional diversion of Rs 14 per litre from their customs duty recovery towards reducing the Petroleum Levy will bring the total adverse impact to a staggering Rs 49 per litre.

This decision strikes at the very foundation of the Brownfield Refineries Upgradation Policy which specifically required that the proceeds of the 10% customs duty would be deposited into dedicated refinery accounts to partially finance their upgradation projects. Diverting these funds for other purposes defeats the very objective of this provision.

Equally serious is the fact that this decision undermines the Policy’s explicit assurance of protection against adverse changes during the project execution period. Such assurances were fundamental to establishing the financial viability and bankability of these multibillion-dollar investments.