KARACHI: The government has asked refiner Cnergyioc Pk Limited (CPL) to submit a revised plan for paying back Rs47.5 billion in outstanding petroleum levy (PL) that it owes to the state, according to an official document seen by The News on Monday.
The CPL’s Deed of Settlement (DOS) landed in the meeting of the federal cabinet last week and it ratified the decision of the Economic Coordination Committee (ECC), which sought the revised plan from the refinery, which has defaulted on payment of PL since 2019.
“ECC considered the summary dated January 31, 2024 submitted by the Petroleum Division regarding DOS to the Pakistan Oil Refining Policy 2023 for upgradation of existing brownfield refineries,” the document of the cabinet decision states.
“While endorsing the view point of the Finance Division, it inter-alia directed the Petroleum Division to review the plan for effective recovery of PL from M/S CPL”.
The CPL had submitted a DOS with the government last year to pay the due amounts to become eligible for executing an upgradation agreement with the Oil & Gas Regulatory Authority (OGRA) under the Brownfield Refinery Policy to benefit from the fiscal incentives provided in this policy.
The CPL offered to pay Rs225.2 million on approval of the DOS and Rs790 million per month in 60 installments over five years, according to the document. CPL also gave postdated cheques as a guarantee.
However, the Finance Division rejected the plan and sought bank guarantees instead of cheques, a cut in the payment duration from five to three years, and the inclusion of late payment surcharge in the installment plan.
The refinery spokesman said the CPL submitted a settlement plan with recourse which was required under the approved “Pakistan Oil Refinery Policy for Upgradation of Existing/Brownfield Refineries 2023” in which a settlement clause was already included upon Finance Ministry’s recommendation and input.
"The Finance Ministry comments suggested that the Settlement Deed may include a reduction of the tenure from 5 years to 3 years; it may include a Bank Guarantee and it may include LPS. ECC while endorsing these comments directed the Petroleum Division to review the original plan for its effectiveness," the spokesman added.
"The CPL is constantly engaged with the government of Pakistan on recovery of its dues from the government entities which are more than the outstanding PL dues, which will reduce the duration to even less than two years. Moreover, other points raised by the Finance Ministry are also being reviewed and addressed in accordance with the policy." "CPL is fully committed to arriving at an early settlement of the matter in adherence to the approved “Pakistan Oil Refinery Policy for Upgradation of Existing/Brownfield Refineries 2023."
As Pakistan Refinery Limited has already signed the agreement, the other refineries have to execute the upgradation agreements under the amended refining policy, notified last week, to allow a 10 percent tariff protection/deemed duty applicable on motor gasoline and diesel’s refinery price for 6 years from the date of notification and opening of the joint Escrow Account with Ogra.