The Senate’s Standing Committee on Petroleum was told on Wednesday that the new oil refining policy, which mainly focused on attracting maximum investment in this sector, would soon be presented before the Federal Cabinet for its approval.
The policy would allure huge investment in the oil refining sector by offering tax rebate to the local and foreign investors for up-gradation and establishment of new deep-conversion refineries, Secretary Petroleum Dr Arshad Mahmood informed the meeting, chaired by Senator Abdul Qadir.
It was the maiden meeting of the Senate panel after its reconstitution aimed at getting a detailed briefing on working and performance of the Petroleum division and its attached departments.
At the outset of the meeting, the chairman highlighted the important role of the Petroleum Division in meeting the country’s ever-growing energy needs.
He called for exploring innovative means and ways to replenish the shortage of energy by stepping up oil and gas exploration activities and removing hiccups for encouraging investment in the sector.
Briefing the committee on salient features of the policy, the secretary said import duty on motor gasoline (from 5% to 10%) and diesel (from 13% to 10%) would be applicable as tariff protection for refineries, effective from January 1, 2022 to December 31, 2026.
He mentioned that there would be a 10-year income tax holiday for up-gradation, modernization and expansion of the existing refinery projects, besides a 20-year income tax holiday for all new deep-conversion refinery projects of a minimum capacity of 100,000 Barrels per Day (BPD).
As per the policy, he said the product pricing formula of refineries would be based on ‘True Import Parity Price’, adding there would be zero percent duty on import of crude oil from fiscal year 2023-24.
Dr Arshad said it would also offer exemption from custom duties and other levies on import of any equipment and machinery for up-gradation and establishment of new oil facilities.
Answering a query of the chairman, the secretary said currently 3,800 Million Cubic Feet per Day (MMCFD), including imported Liquefied Natural Gas, was available in the system.
He said the faulty Floating Storage Regasification Unit of Engro’s terminal would be restored by July 5 after its overhauling. Following which, the energy supply situation would return to normalcy, he added.
The body was also apprised that Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC) had considerably reduced their line losses under a pro-active strategy and with the support of provincial governments.
The secretary said 90 per cent work on the dualization of White Oil Pipelines (Karachi to Mehmod Kot) had been completed, and the pipeline’s testing and commissioning was scheduled for September 01, 2021.
Through the pipeline, he said multi products such as diesel and petrol would be transported in batches which would eventually ensure uninterrupted supply of fuel and reduce reliance on oil tankers.
The chairman observed that there was litigation on around 40 to 50 oil and gas exploration blocks which should be brought to a logical end at the earliest so that new discoveries could be ensured to make the country self-sufficient in the energy sector.
Among others, the meeting was attended by Senators Fida Muhammad, Aon Abbas, Prince Ahmed Omer Ahmedzai, Sarfaraz Ahmed Bugti, Qurat-ul Ain Marri, Engr Rukhsana Zuberi, Saadia Abbasi, Afnan Ullah Khan, Atta ur Rehman, senior officials of the Petroleum Division and its attached departments.