Karak Oil Refinery to be set up in area near Kohat

K-P govt decides to award project to Frontier Works Organization

PESHAWAR: Karak Oil Refinery, a project with an estimated cost of Rs62 billion would have the capacity to generate 40,000 barrels of oil per day, said government officials. However, the K-P government decided to award the project, along with four hydropower projects, to the Frontier Works Organization (FWO).

An official close to the development told The Express Tribune the oil refinery would be constructed in Krapa, an area situated in Karak but also close to Kohat. The chief Minister decided to construct the refinery in Krapa so that the tug of war between lawmakers of both the districts could be brought to an end.



For the project, the government would get 2,000 kanals of land and mode of the project would be finalised on July 30.

The official was optimistic about the completion of the project by the end of March of 2018. “The products of the oil refinery would have international standards with octane ratings above 92,” he added.

Octane is a chemical substance in petrol of gas, used as a way of measuring its quality.

Dispute on project

The oil refinery construction has remained a disputed subject between the politicians of Kohat and Karak as they have tried it to be constructed in their district.

“The dispute ate our two years and we could not reach a decision,” the official said, adding water would be supplied to the refinery from whichever water-rich area is the nearest.

Management

The official said the government turned towards FWO after it got cast down by the performance of the structural changes brought in the Pakhtunkhwa Energy Development Organization (PEDO) and Khyber Pakhtunkhwa Oil and Gas Company Limited (KPOGCL).

“Both the entities have been shaped on the pattern of the corporate sector, but they could not bring investments,” he said. “The government had only one way for the project and it was to make government to government contract for which FWO was the best option.”



The official said the contract with FWO would not only save time for them, but would also be more cost-effective than that of a private contractor. “We would not have to go for the lengthy process of bidding, in FWO’s option. Bidding takes a year or two in such projects,” he said, explaining the time that would be saved.

“The terms and conditions would be according to international standards and as per the K-P government’s own will,” he said, adding the government would most probably not need to hire a project management unit and thus it will save cost that would have gone in having such a unit. He maintained the government will also not have to spend money on floating tenders, it will not have to pay in advance and there will be no cost escalation.



Concerns on expertise

About the FWO having no expertise in oil refinery the official said, “You need not have expertise in oil refinery because you could place your order to an Italian or Chinese company and they will prepare everything over there.” He added, “You [only] have to fix them here.”

The official was of the opinion the oil refinery would create 100,000 direct and indirect jobs opportunities.

Hydropower projects

About the hydropower projects the official said four projects, including those for Balakot hydropower with an estimated capacity of 300 megawatts and estimated cost of $330million, Boonizait hydropower project of 300 megawatts and estimated cost of $254 million, are decided to be awarded to FWO. Moreover, Gharit Swir Lasht project having 377-megawatt capacity and estimated cost of $1,117 million and 260-megawatt Jamshail Mori Lasht project expected to cost $561 million have also been decided to be given to FWO. The last three projects are in Chitral and the first one is in Balakot.

Published in The Express Tribune, July 23^rd, 2016.