Pakistan and Abu Dhabi's International Petroleum Investment Company (IPIC) management are going to sign an Implementation Agreement (IA) on November 13, for setting-up a $5 billion Khalifa Coastal Refinery (KCR) at Gwadar.
As per IA, IPIC and its partner, PARCO will complete KCR by 2012. The refinery will help Pakistan meet its local demand and export the rest of refined petroleum products.
Earlier, KCR was supposed to be granted the right to export 100 percent refined petroleum products. However, at the last stage of the negotiations the government managed to persuade IPIC and PARCO for amending the basic principle. The amended agreement provides that KCR will meet Pakistan's demand of petroleum products and export only surplus production.
An official told Business Recorder that IPIC and PARCO have agreed to provide Pakistan as much refined petroleum product as it needs from KCR and export only surplus production. They term it as a good development since the new arrangements will help Pakistan meet its growing petroleum products needed in the future. KCR is a joint venture of IPIC and PARCO with 74 and 26 percent shares respectively.
An IPIC delegation headed by managing director Khadem Al Qubashi is scheduled to reach Islamabad on Monday to sign KCR IP. Petroleum secretary Furrukh Qayyum will sign KCR IP on behalf of government of Pakistan. The ceremony is being arranged in a local hotel for the purpose. Prime Minister Shaukat Aziz will witness the signing.
This is very important development as a strong group like IPIC is coming to Pakistan with multibillion dollar investment. Pakistani authorities hope that International Petroleum Company's coming into Pakistan with huge investment will woo many other bigger investors to Pakistan for investment.
The Economic Coordination Committee ECC of the Federal Cabinet had approved a special package of concession in taxes and duties in its meeting held on October 10. The package promises tax exemption for KCR for 20 years. This was followed by a two member official delegation visit comprising Petroleum Secretary, Farrukh Qayyum and Director General Oil, G.A. Sabri visit to Ahu Dhabi from October 27 to 29. The delegation finalised modalities for IA signing. The official delegation presented the details of IA and outcome of its negotiations with IPIC management to the federal cabinet in its last meeting for endorsement.