Parco’s ex-refinery pricing formula may be extended

The Pakistani government said it might extend the ex-refinery pricing formula for Pak Arab Refinery Ltd. (Parco), based on a guaranteed minimum 25% rate of return on net equity. According to the formula, the government is bound to compensate Parco if its rate of return on equity remains below 25%. If it exceeds 25%, then the government will not have to compensate Parco. After seeking guidance from the Law Ministry, the Petroleum Ministry submitted a summary to the Economic Coordination Committee (ECC) of the Cabinet for formal approval. The ECC Sub-Committee on ex-oil refinery pricing formula had also directed the Petroleum Ministry to expedite the process of extending the Parco ex-refinery oil pricing formula. Parco is a joint venture between the government of Pakistan and the Emirate of Abu Dhabi. Pakistan has 60% and UAE 30% equity in Parco, which is located in the Mehmood Kot area of Multan in Pakistan. (May 12, 2009)