The present government should specially focus on inviting investments in petroleum refining and petrochemicals industry so as to cut import bill and enhance exports by towing the industrially developed countries like China, Japan, Germany and USA, which have utilized the petro-chemical industry as the core building block of their economies. The US-based chemical industry expert Syed S Hasnain stated this in his recent study conducted for Pakistan Chemical Manufacturers Association to assess needs of the chemical industry in Pakistan.
The report finds that petroleum products and petrochemicals over last 25-30 years have continued to play a vital role in building stronger and prosperous economies across the globe, being engine of economic growth for industrialization and rapid urbanization. The report is confident that Pakistan can also bring industrial revolution by focusing attention on development of chemical manufacturing industry. Despite its importance, Pakistan regretfully has inadequate refining capacity which is in poor health posing safety hazards.
Besides, the country lacks any naphtha cracker for producing petrochemicals thus rely entirely on imports for meeting domestic demand. Pakistan's import bill on petroleum products and petrochemicals runs into $12-14 billion annually as about 75 percent of the country's demand is met through imports. This is the largest component in Pakistan's import bill that would continue to rise in coming years due to the demand growth and likely outage of some refining capacity amid safety issues.
After Prime Minister Imran Khan's visit to Saudi Arabia in October, official announcements in various sections of Pakistan media were made that Saudi Arabia has agreed in principle to make a multi-billion dollar investment to build a refinery complex at Gwadar. Since then, no tangible progress has been made in this direction nor there seems to be any clarity from the government on developing the project framework. This situation has created some sort of uncertainty and confusion not only for the foreign investor but also for the domestic players who may be eager to capitalize on opportunities from this mega project, the report added.
Meanwhile, the PCMA secretary general Iqbal Kidwai said that despite project importance and government's drive to curb imports, implicit campaign against investments in refineries were made recently arguing that such huge investments are not only detrimental to the country's limited resources but are also not economically viable.
Some of the elements have given opinion to the government that refining business has poor profitability, does not create large employments and hardly saves foreign exchange. As a result, the country should continue importing high quality petroleum products including petrochemicals rather than manufacturing them locally, he added.
Kidwai said these concerns against refinery investments may have been raised by certain elements who could have vested interest in seeing continuation of imports into Pakistan. Accordingly, it was suggested that investments and resources should be diverted to other industries simply because oil refineries are not great investments to be strived for.