Pakistani cabinet favors new refinery policy

The Economic Coordination Committee (ECC) of the Pakistani Cabinet is likely to approve a three-year oil refinery policy containing incentives for oil refineries and penalties if the refineries fail to complete their petroleum product upgrade projects by 2012. Under the new policy, the Petroleum Ministry will arrange foreign exchange for oil refineries to import crude oil through State Bank of Pakistan (SBP). It has also proposed an increase in ”deemed duty” from 7.5% to 10%, with a cap at US$80 per barrel. The government and the oil refineries are expected to enter into an engineering, procurement and construction (EPC) agreement in December 2009, which will be implemented in July 2010. The Petroleum Ministry will monitor the work on the upgrade projects, and if the oil refineries fail to start work on the projects during the monitoring period, ”deemed duty” would be withdrawn by the government. (April 12, 2009)