The Cabinet Committee on Energy (CCoE) is all set to consider revised Oil Refining Policy 2021, along with incentives proposed by the Petroleum Division. Back on September 13, 2021, the CCoE in its meeting considered the summary submitted by the Petroleum Division, and has approved the Pakistan Oil Refining Policy. According to the meeting, PD was directed to present workable option for sustainability and up gradation of existing refineries including the mechanism for payment of incremental incentives. With observatory points i.e. extending tariff protection to an industry prior to its Commercial Operations Date (COD) by utilization of revenue stream arising out of tariff protection on offsetting of losses instead of up gradation was taken in account. According to Power Division, as a matter of fact, the protection regime in the refining sector has been in place since 1960s which has taken many forms associated to the emerging challenges of different times. The tariff protection formula introduced in 2002 for the existing refineries has aimed at ensuring their operational sustainability. Under the current state of affairs, the proposed policy choice is to upgrade existing five Refineries and attract investment for one new refinery (300,000 barrels per day). As the refinery business has become massively capital intensive ($10 billion for new refinery), up gradation of existing refineries (up to the level of 80% deep conversion) to achieve the target of Euro-V specification fuel by 2026 through redefined tariff protection regime seems the most viable and affordable option. The revised Pakistan Oil Refining Policy 2021 has been submitted for the approval of CCoE, along with the request that the deadline of December 31, 2021 to obtain approval of the Government.
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