Monitoring Report
ISLAMABAD:
Following the ‘partial’ approval of refinery policy 2021, the chairman of Expert Group on Petroleum has proposed to the government to shut down three refineries, namely Pakistan Refinery, National Refinery and Byco Petroleum.
Though the Expert Group on Petroleum Chairman Farooq Rehmatullah has suggested to the government to close three refineries out of total five refineries, however, the country cannot depend on imported petroleum products which will cause additional burden on the ports and increase the country’s oil import bill.
The Expert Group on Petroleum was formed by the Economic Advisory Council (EAC) – an independent body that gives economic advice to the government.
According to sources in oil refining sector, the proposed closure of three refineries will place more burden on the ports and increase the country’s oil import bill, industry players say. They said that refineries save millions of dollars in foreign exchange by refining and producing different petroleum products. Similarly, they employ a large workforce in all parts of the country. Some refineries have even shared plans to expand their facilities and have allocated millions of dollars for the upcoming projects, said sources.
The sources in oil sector also claimed that Farooq Rehmatullah, who is the former CEO of Shell Pakistan, has vast experience in the field of oil marketing but has no experience in crude refining. They said that as member of the EAC, he has also backed the proposal that Pakistan should import petroleum products from different countries including India. They said Farooq Rehmatullah has expressed his point of view in writing to Prime Minister Imran Khan and also told it to members of EAC and CCOE. After retiring from Shell, he joined Hascol Petroleum as Chairman of the Board of Directors, said sources.
They added that when the oil refinery policy was made public in June 2020, Farooq Rehmatullah lobbied against this new oil refinery policy.
At present, Pakistan has total five refineries namely Pakistan Refinery, National Refinery and Byco Petroleum, Parco and Attock Refinery to meet fuel demands of the country as three refineries are producing jet fuel and kerosene oil to meet strategic requirements of the country. Similarly, Saudi Arabia and the United Arab Emirates (UAE) have also pledged construction of two refineries. However, so far, no mentionable physical progress has been achieved in this regard.
It is pertinent to mention here that Adviser to Prime Minister on Commerce Abdul Razak Dawood, Cabinet Committee on Energy (CCOE) Chairman Asad Umar and Minister of Maritime Affairs Ali Zaidi had earlier criticised the tariff relief for refineries proposed in the Refinery Policy 2021.
Following establishment of liquefied natural gas (LNG) terminals, Karachi ports have found it difficult to transport oil. The Ministry of Maritime Affairs is working on setting up two more LNG terminals, which will cause further congestion at ports. Furtehrmore, Pakistan State Oil (PSO) has paid millions of dollars in demurrage charges due to the congestion at ports.