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Thursday April 18, 2024

Govt plans PMU for upgrades amid refineries pushback

PMU will be led by DG (Oil) and will consist of representatives from refineries, OGRA, and a consultant to be jointly engaged by the refineries

By Tanveer Malik
March 22, 2024
A representational image shows Total Energies employees walking in the Donges oil refinery in Donges, on September 8, 2023. — AFP
A representational image shows Total Energies employees walking in the Donges oil refinery in Donges, on September 8, 2023. — AFP

KARACHI: The government is setting up a project management unit (PMU) to streamline the upgrade of the country's aging refineries under the oil refining policy, official documents showed.

"Pursuant to the Cabinet Committee on Energy (CCOE) decision, a PMU is being established by the ministry of Energy (petroleum division) (MOE) to facilitate the implementation of the upgrade projects as well as assist the committee for the removal of difficulties and anomalies provided in the Pakistan Oil Refining Policy for the upgradation of existing Brownfield Refineries, 2023 (the policy)," a circular said.

The PMU will be led by DG (Oil) and will consist of representatives from refineries, the Oil & Gas Regulatory Authority (OGRA), and a consultant to be jointly engaged by the refineries.

Sources said the local refineries, however, oppose the move of the petroleum division in a meeting recently when the PMU came under consideration. "They termed it an unnecessary decision of the petroleum division when OGRA has been working through a consultant in this regard," industry officials told The News. "This new move is only duplication and would further delay the upgradation agreements of refineries." Officials said that a final decision would be communicated to the Ministry in the next few days about the opinion of the sector, which termed the "new consultant unnecessary".

According to the terms of reference, the consultant may provide the services of experts in the fields of finance, legal, technical (engineering), and project management on an as-and-when-required basis to the PMU.

The scope of services of the consultant included examining concerns highlighted by refineries during the finalization of the upgrade agreement and escrow account agreement and recommending possible solutions to the PMU/committee for resolution and analysing any requests of refineries for clarity on the policy and providing recommendations to the PMU/committee after conducting thorough due diligence (legal/technical/financial) of the case. Also, the recommendations should be backed by legal, technical, and financial implications as well as any available international benchmarks, especially from our region, and assist in tracking the progress of the projects through status reports (use relevant tools including RAID - risks/assumptions/issues/dependencies logs) and review the project plan.

The consultant will also validate any issues or gaps in project planning and implementation to the ministry of Energy and provide an unbiased and independent view on any disputes that may arise between stakeholders and conduct due diligence and recommend possible solutions to any issues highlighted by refineries which may cause delay in the upgrade projects. This may include issues related to forex/LC, tax refunds, NOCs, custom duty on the import of P&M, obtaining income tax benefits in the supplier’s country under double taxation treaties.