ISLAMABAD (The Thursday Times) — The government’s October 30 change to the way petrol is priced could cost Pakistan’s refineries about Rs49 a litre and put $5-6 billion of planned upgrades in doubt, the head of Attock Refinery has warned the government.
In a communication to the government, Attock Refinery chief executive Adil Khattak said bringing pre-war premiums and incidentals into the petrol pricing mechanism would cost refineries about Rs35 a litre. Diverting a further Rs14 a litre from their customs duty recovery to reduce the petroleum levy would bring the total hit to Rs49, he said.
Khattak said the decision was taken without consulting the industry, which he said had already agreed twice to cap its margin on diesel. The move also cuts against the Brownfield Refineries Upgradation Policy, he argued, under which proceeds from a 10 per cent customs duty go into dedicated refinery accounts to help pay for upgrades, and which promises protection from adverse changes while projects are under way.
The timing is awkward for the sector. Four refineries signed upgrade agreements on September 24, with PARCO expected to follow, and they are now in talks with local and international lenders. Khattak warned that changing the financial terms after signing could shake lender and investor confidence at a critical stage. He put the cost of each year’s delay to the economy at about $1.5 billion.
No public government response to the warning had emerged when this story was published. Fuel prices have been changing frequently, with petrol held at Rs377.91 a litre until Monday in the most recent review.
