ISLAMABAD: The Cabinet Committee on Energy (CCoE) has yet to schedule deliberation on the request forwarded by the Petroleum Division for an extension in the deadline for signing upgrade agreements with five domestic refineries for six months until October 2024, sources in the ministry disclosed to Business Recorder.
The Petroleum Division moved a summary in May to the CCoE, days after the deadline expired. The deadline for signing upgrade agreements with the Oil and Gas Regulatory Authority (OGRA) was April 22, 2024.
Three refineries, Attock Refinery Ltd, National Refinery Ltd and Pakistan Refinery Ltd, gave consent to sign the agreements before the deadline, while two other refineries, Parco and Cnergyico, sought time to meet conditions in the Pakistan Oil Refining Policy for Upgradation of Existing/ Brownfield Refineries 2023.
In the energy symposium arranged by Shell Pakistan, Chief Executive Officer Attock Refinery Limited Adil Khattak accused the Petroleum Division for not arranging the signing with the willing refineries, nor extending the deadline date in time to accommodate PARCO’s request.
The Division said the Pakistan Oil Refining Policy for Upgradation of Existing/ Brownfield Refineries 2023 was approved by the Federal Cabinet in February to upgrade the existing refineries to produce environment-friendly Euro-V fuels and decrease the production of furnace oil.
The policy provided an incremental incentive of 2.5 percent on HSD and 10 percent on petrol in the form of deemed duty for seven years to achieve this objective.
The incremental incentive has been deposited in an escrow account maintained by OGRA with the respective refinery for meeting up to 27.5 percent of the upgrade projects’ cost.
The OGRA is to allow the withdrawal of funds from the escrow account by the respective refinery, post-financial close of the Upgrade Projects, and against expenditure made for each milestone or the deliverables.
To avail the said incremental incentive, the refineries were required to execute Upgrade Agreements, open an Escrow Account with OGRA and provide Rs1bn bank guarantee to OGRA within 60 days of notification of the policy; i.e., by April 22, 2024.
The policy required the deemed duty to be cut from 7.5 to five percent for refineries that do not sign the upgrade agreement by the said deadline.
Copyright Business Recorder, 2024