Cabinet Committee Approves Refining Policy
Staff Report
Energy sector is the backbone of any economy, more so in the case of Pakistan but unfortunately, the core challenges we face today in the realm of economy stem from ill planning and mismanagement of the energy sector.
Refineries Policy summary approved by CCoE with three minor changes:
- Upgrade Agreement to be signed within 60 days instead of one month
- Capping on incentives for refinery projects based on used equipment increased to 24.5 % from 22% against 27.5% for new equipment
- Implementation/ policy committee to consist of secretaries of Petroleum, Finance, and Law divisions.
It is, therefore, good to know that the Oil Refineries Policy for Upgradation of Existing/ Brownfield Refineries with some amendments was approved by the Cabinet Committee on Energy on Tuesday.
This badly needed policy took more than four years in the making and final approval was delayed on one pretext or another.
The Policy was finally notified on August 17, 2023, but unfortunately had some anomalies that were not acceptable to the refineries. After intense and prolonged consultation between the government, refineries, and independent financial and legal advisory firms, the Policy was appropriately amended and approved by the Cabinet Committee on Energy in a meeting held on Tuesday chaired by Minister of Energy Muhammad Ali.
The last step needed now is its approval and ratification by the Cabinet which we hope will be done in the next few days.
The Policy will enable the Oil Refineries to undertake major upgradation projects to not only comply with Euro – -V specifications but also increase production of deficit products of petrol and diesel by 99 % and 47 % respectively and also reduce the production of furnace oil by 78%, which because of drastically reduced demand in recent years often results in storage constraints forcing the refineries to reduce capacity utilization.
The refineries up-gradation will bring in an investment of US $ 5 – 6 Billion and not only result in cleaner environment-friendly fuels but also major savings of precious foreign exchange.
The Refineries Upgradation Policy would surely be termed as the most important achievement of the Care Taker government and it is hoped that it would be implemented in its true letter and spirit.
