Participants of a meeting held here at Board of Investment requested to review the base price fixation for crude oil in different zones, which has been capped at US dollar 45/bbl, to make the future investment in the exploration and production (E& P) sector attractive.
Similar incentives and exemptions as given to Khalifa Coastal Refinery for projects in the refining sector were also requested along with the pricing incentives to support environmental projects. These issues were raised at the first meeting of the 'Oil, Gas and Mining Advisory Board' on Tuesday. Mushtaq Malik, secretary, Investment Division and BoI chaired the meeting.
The objective of the newly constituted forum was to have a policy dialogue between private sector investors and government officials from concerned ministries on the hurdles and opportunities for investment in the oil and gas sector. Oil and gas sector is considered to be playing a pivotal role in sustainable economic development and maintaining long term economic growth.
Investors said that there should be a level playing field between locally produced and imported LPG and between different fuels. It was suggested that in order to promote this policy objective imported LPG should be exempted from GST so it can be priced competitively against locally produced LPG. It was noted that price manipulation was being undertaken to undermine the government's policy and pressurise Oil and Gas Regulatory Authority (OGRA) to trigger reasonableness clause in LPG rules.
The Advisory Board from the private sector side was represented by Attock Refinery, Engro VoPak, Shell Pakistan, Tethyan Copper Company, Chevron Pak, Pakistan Petroleum and Progas Pakistan.
Addressing the meeting, Secretary BoI informed that oil & gas sector attracted FDI of $545.1 million in 2006-07, while in 2000-01 it was merely $80.7 million. The Competitiveness Support Fund, a project of USAID and Ministry of Finance, informed that Merrill Lynch in their recently published research policy paper on South Asian economies has declared Pakistan Petroleum Policy to be the second best in the region. Business Monitor too has highly prated the new petroleum policy of Pakistan.
The Ministry of Petroleum informed the meeting that 60.25 million MTOE energy has been consumed during 2006-07. Total energy will increase 7 folds from 55 MTOE in 2006 to 360 MTOE in 2030 and power requirement will grow 8 folds from 19000 MW in 2005 to 162,000 MW in 2030.
The success rate for drilling is one of the highest in the world at 1:3.4 and the largest ever concessions were given in 2006-07 with the number reaching 33. The number of towns that have been given gas has increased by 106 percent from 2004-. Transmissions kms have increased by 35 percent from 2001, distribution kms have increased by 48 percent in the same period.
The private sector appreciated BoI's initiative to provide an interactive policy dialogue platform. Whilst appreciating the petroleum policy, they raised concerns on land acquisition, security of international contractors in the field, and the need for provision of fiscal incentives to local companies to invest in advance technology/equipment for seismic acquisition and processing.
In addition, investors stressed the need to utilise existing infrastructure to handle oil imports and LNG imports into Pakistan till alternatives are commissioned. Oil marketing companies raised the perception management issue for Pakistan vis a vis the price differential claims worth over Rs 40 billion, hoping that government would resolve urgently so as to build investor confidence, noting that this was a concern amongst their shareholders.
The participants hoped that issues and problems that had been presented by them to the government would bring positive outcomes. It was also suggested that similar meetings might be organised by Investment Division and BoI in Peshawar, Quetta and Karachi for yielding productive results.
Comments
Comments are closed.