Islamabad 14, April 2022: According to the draft of the policy, the new policy seeks extension up to December 31, 2022, for availing tax holiday under clause 126B of Finance Act 2021-22, to obtain government approval for setting up new deep conversion refineries from existing deadline of December 31, 2021. The new policy also says there shall be no duties and sales tax on import of crude oil, being the main raw material of refineries, from July 1, 2022.
Saudi Arabia has decided to shift a proposed $10 billion oil refinery to Karachi from Gwadar, the center stage of the Belt and Road Initiative in Pakistan, further supporting the impression that the port city is losing its importance as a mega-investment hub.
Pakistan wants to attract investment and other financial support to tackle a soaring current account deficit caused partly by rising oil prices. Last year, Saudi Arabia offered Pakistan a $6 billion package that included help to finance crude imports.
Beijing has pledged $60 billion as part of the China Pakistan Economic Corridor (CPEC) that involves building power stations, major highways, new and upgraded railways and higher capacity ports, to help turn Pakistan into a major overland route linking western China to the world.
A group of Chinese state-owned enterprises has volunteered to build a $15 billion oil refinery complex, which might help Pakistan, which has been hit hard by massive withdrawals of foreign investment in recent years.
China Petroleum Pipeline Engineering Company Limited is a wholly owned subsidiary of China National Petroleum Corporation and the country’s largest pipeline builder.
According to Board of Investment (BOI) Secretary Fareena Mazhar, the China Petroleum Pipeline Engineering Company LTD (CCP) and China Zhen Hua Import and Export Corporation have expressed interest in investing $15 billion in an oil refinery complex.
“With setting up of an oil refinery in Gwadar, Saudi Arabia will become an important partner in CPEC,” Pakistan Petroleum Minister Ghulam Sarwar Khan said.
The Saudi news agency SPA earlier reported that Falih met Pakistan’s petroleum minister and Maritime Affairs Minister Ali Zaidi in Gwadar to discuss cooperation in refining, petrochemicals, mining and renewable energy.
“Saudi Arabia wants to make Pakistan’s economic development stable through establishing an oil refinery and partnership with Pakistan in the China Pakistan Economic Corridor,” Saudi Energy Khalid al-Falih told reporters in Gwadar.
Saudi Arabia signed a memorandum of understanding to invest $10 billion in an oil refinery and petrochemical complex at Gwadar in February 2019, during a visit by Crown Prince Mohammad Bin Salman to Pakistan. At the time, Islamabad was struggling with declining foreign exchange reserves.
The new policy also suggests Oil and Gas Regulatory Authority (OGRA) to monitor project progress to ensure the proceeds are used only for upgradation and refineries provided bank guarantee worth Rs500 million till the start of commercial operations.
There will be no dividend payment and adjustment of losses permissible from Special Reserve Account, reads the policy draft.
Under the current state of affairs, the policy proposed upgrade of existing five refineries and attracting investment for one new refinery with the capacity of 300,000 barrels/day.
