The Chairman of Expert Group on Petroleum Farooq Rehmatullah has suggested the government to shut the three oil production giants namely, Pakistan Refinery, National Refinery, and Byco Refinery in the midst of the partial approval of the earlier controversial refinery policy.
Farooq Rehmatullah said that he was opposed to tariff protection for the existing refineries in the new refinery policy.
He further argued that Pakistan Refinery, National Refinery, and Byco were making no efforts to expand their plants.
“They are just seeking protection in the new policy,” he said, adding that the government should focus on larger refineries that would be established in Pakistan by Saudi Arabia and the UAE.
The Chairman also pointed out to the world’s smaller refineries that are shutting down.
These three refineries produce jet fuel and kerosene oil to fulfill the strategic requirements of the country. Presently, Pakistan has five refineries, the other two are Parco and Attock Refinery.
The officials are planning to construct new refineries pledged by Saudi Arabia and the United Arab Emirates (UAE). However, no on-ground progress is yet reported and the plan is yet a plan on charts and paper.
Earlier, Adviser to Prime Minister on Commerce Abdul Razak Dawood, Cabinet Committee on Energy (CCOE) Chairman Asad Umar, and Minister of Maritime Affairs Ali Zaidi criticized the subsidies given to these refineries in the form of tariff relief in the Refinery Policy 2021.
Oil industry officials slam the proposal that it would only benefit the oil traders’ mafia that is lobbying to shut down the three refineries.
The Expert Group on Petroleum had been formed by the Economic Advisory Council (EAC) – an independent body that gives economic advice to the government.
The critics questioning the proposal of closing down the refineries said “Pakistan simply cannot depend on imported petroleum products,” adding that these refineries were major strategic assets of Pakistan.
A member of the EAC backed the proposal saying that Pakistan should import petroleum products from different countries including India. He expressed his point of view in writing to Prime Minister Imran Khan and also shared it with the members of EAC and CCOE.
When the oil refinery policy was made public in June 2020, Rehmatullah lobbied against it.
Following the 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.
Pakistan State Oil (PSO) has paid millions of dollars in demurrage charges due to the congestion at ports.
Industry players expressed that the proposed closure of three refineries would allow further congestion on the ports and increase the country’s oil import bill. They added that these refineries saved millions of dollars in foreign exchange by refining and producing different petroleum products.
In addition, there is a huge workforce in these refineries parts and they will be jobless. Some refineries have even shared plans to expand their facilities and have allocated millions of dollars for the upcoming projects.