Barely two months after the new PML-N government has taken over, the Abu Dhabi government is planning to revive the multi-billion-dollar Khalifa Coastal Oil Refinery – a joint venture with Pakistan – which was put on the back burner during the previous government’s tenure because of global recession and a row over management issues.
The board of directors of Pak Arab Refinery Limited (Parco) has decided to immediately call a special meeting on the refinery in an attempt to finalise arrangements to kick off work on the project.
The Khalifa refinery will become the largest oil refinery of the country with a refining capacity of 250,000 barrels per day based in Balochistan and costing an estimated $6 billion.
At present, Parco is the largest refinery of the country with a capacity of 100,000 barrels per day.
Parco is a joint venture between the Government of Pakistan and the emirate of Abu Dhabi in which the former holds a 60% share and the latter has a 40% stake through the Abu Dhabi Petroleum Investment Company LLC, a subsidiary of International Petroleum Investment Company (IPIC).
In the Khalifa refinery, IPIC will have majority shareholding at 74% whereas Parco will have 26% stake.
According to sources, mounting inter-corporate debt was one of the key reasons that forced the Abu Dhabi government to put the project on hold. As the new government has cleared almost all of the debt, Abu Dhabi is planning to press on with the project.
Officials said the Parco board, in its last sitting in June, decided to hold a meeting on reviving the Khalifa refinery, but it could not be held because of some reasons. Now, it has been decided to hold a special meeting on the project very soon to finalise arrangements for moving ahead with construction work on the refinery.
“A special meeting of the Parco board of directors will be held to resolve the issues that are blocking the way of the project,” an official said.
The Parco board has already accorded approval to initial funding of $500 million for the refinery, including immediate release of $13 million for sub-contracts.
The Khalifa refinery, which has been allotted 1,000 acres of land, will have a capacity to refine 13 million tons of petroleum products per year.
Published in The Express Tribune, August 16th, 2013.