The downstream oil industry in Pakistan is seeking a share in the revenue collected by the Government through its Petroleum Levy, according to a working paper prepared by a Ministry of Petroleum appointed task force. The working paper also reveals that the downstream sector is seeking a new pricing formula that ensures an adequate rate of return, and incentives similar to those offered to the upstream industry.
The task force, established to review the petroleum policy established in 2007, consists of Sohail Wajahat Siddique of PSO (pictured), Adil Khattak from Attock group and Rashid Lone. The working paper includes several recommendations for reform in the sector, including the use of the Petroleum levy for improving infrastructure, incentives for environmental projects in the refinery sector and public-private partnerships. The paper adds that prices for alternative fuels should be kept at rational levels to allow for fair competition, and that the jet fuel market should be boosted by more air traffic.
The trio also advised the minister to ensure that refineries operate at full capacity to minimise imports, with incentives for refineries producing over 100,000 bpd, and that product specifications should be devised in line with international benchmarks. An increase in duty of 10% on diesel was also proposed.
The paper calls on the Government not to treat the refining sector as a normal commercial business, citing its deep impact on Pakistan’s energy security and defense needs. It urges the Government to introduce a consistent, investor-friendly policy that guarantees investment in the refining sector for at least 10 years.
PetrolWorld 01122011
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