CCOE meeting: Refinery Policy 2021 unlikely to witness smooth sailing

ISLAMABAD: The Refinery Policy 2021 draft which is being pitched in the (cabinet committee on energy) CCOE meeting scheduled tomorrow (Friday) may not witness a smooth sailing, as some of the cabinet members are of the view that the policy proposes 17 percent internal rate of return (IRR) facility will go up to more than 40 percent particularly for two big refineries at the cost of the consumers, top officials confided to The News.

In the ECC meeting held on August 11, 2021, Petroleum Division presented the refinery policy draft for approval wherein Federal Minister for Planning and Special Initiatives Asad Umar came down heavily on top mandarins of petroleum division for putting up the policy draft in ECC for approval. Asad Umar prevailed in the meeting and resultantly Finance Minister Shaukat Tarin who heads the ECC forum directed the petroleum division officials to present the policy in the appropriate forum of CCOE.

According to the top sources, later on the Minister for Planning and Special Initiatives during a briefing on the proposed refinery policy from the petroleum division, raised questions on many issues particularly on the internal rate of return. Asad, sources said, raised his eyebrows on section 4 of the proposed finalized policy draft offering tariff protection in the form of 10% import duty on Motor Gasoline and Diesel of all grades and imports of any other white products used for fuel for any kind of motor or engine for 6 years effective from January 1, 2022 to December 31, 2027. This will provide more capital than the required investment of $3.5 billion for upgradation benefitting particularly two bigger refineries.

In the said meeting, it also came to be known that when for the first time of Covid-19 hit the whole world including Pakistan, the refineries received 13 percent tariff protection which was later reduced to 12 percent. In early 2021, it was further reduced to 10 percent which is continuing and the same has been included in the policy draft for next 6 years.