Improvement: OCAC objects to removing duty on High Speed Diesel

Committee terms suggestion will discourage investors in refinery sector.

ISLAMABAD: The Oil Companies Advisory Committee (OCAC) has objected to the suggestion of removing the deemed duty on High Speed Diesel (HSD), saying that such suggestions are very discouraging to the investors who are planning to invest huge amounts in the refinery sector inline with the government’s directives.

In a statement, the OCAC said that the impression that refineries are not working on their up-gradation projects is untrue. The fact is that after the approval of the Policy Framework for Up-gradation of Refineries by ECC in March 2013, the refineries are in different phases of implementing the government’s directives to upgrade.

The statement added that the decision by the ECC had come after lengthy presentations and meetings of the stakeholders. The issue of deemed duty was also thoroughly reviewed and it was agreed that it will be the foundation for supporting the current up-gradation projects and the government’s initiative.

Based on the agreed terms, the refineries have shown their commitment for a total investment of $2.4 billion for the refinery improvement plan.

Attock Refinery Limited (ARL) has awarded the contract to a multinational company for the development of its plant at a cost of $251 million. The project is progressing as scheduled and the ARL intends to meet the deadline of 2015.  National Refinery Limited and other refineries have also fast-tracked their up-gradation projects.

The perception that refineries have not implemented the decision on the ESCROW account is incorrect. In fact, the refineries have requested the government to finalise the modalities. Procedures to open and operate the ESCROW account including certain verifications by the Ministry of Petroleum and Natural Resources for each refinery have yet to be finalised. The refineries director general has also asked the Ministry of Finance for advice in the matter.

The refinery sector in Pakistan, despite possessing a high strategic and economic importance has remained weak. In Pakistan’s uncertain economic environment, any damage to investor confidence needs to be avoided, through implementing favourable policies.

Published in The Express Tribune, December 7^th, 2013.

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