ISLAMABAD: The Cabinet Committee on Energy (CCoE) due to meet on Monday (tomorrow) is likely to approve the long-awaited 2021 refinery policy, with the petroleum division having modified its first project in accordance with the recommendations of the Minister of Planning , Development and special initiatives Asad Umar.
On August 20, the draft policy was reviewed by the CCoE, which had requested the Petroleum Division to review the policy based on the specific points / comments highlighted by the forum and submit the revised draft policy for consideration. after incorporating viable recommendations.
As a result, the Petroleum Division considered the comments of the CCoE and the following changes were made to the draft policy: this amount can only be used after the award of the EPC contract by the respective refineries scheduled to start up. by 2024 (subsection 220.127.116.11 of the policy); and (ii) OGRA will monitor the generation of additional income to be deposited in a special reserve account by each refinery under a separate bank account to be opened at NBP and ensure its use for refinery upgrade / expansion purposes. , in proportion to the additional revenues and the contribution of the refinery (according to the principle of subsection 18.104.22.168 of the Policy).
Oil refining policy could be approved by CCoE on Friday
In order to simplify the governance arrangements, the mechanism for hiring a joint external consultant, the amendments to the force majeure clause have been modified. Previously, a bank guarantee worth Rs 500 million per refinery was required until financial close. As a precaution, this was extended until the commissioning of the project (COD). The form and characteristics of the guarantee will be subject to acceptance by the Department of Energy (Petroleum Division (subsection 22.214.171.124 of the policy).
On August 20, 2021, during the CCoE meeting, the Ministry of Maritime Affairs emphasized that the Single Point Mooring (SPM) activity was theirs and that a policy related to SPM was currently under deliberation by stakeholders.
It was further pointed out that the fiscal incentives, proposed in Pakistan’s 2021 Oil Refining Policy, would be detrimental to seaports. Therefore, the Ministry of Maritime Affairs did not recommend the incentives proposed in the draft policy.
Incentives proposed for refineries in new policy “blocked” by ministers
The CCoE requested the Petroleum Division to review the policy with reference to the following specific points / observations highlighted by the forum: (i) availability of initial tariff incentives for existing refineries for their modernization; (ii) the simplification of the monitoring / governance mechanism suggested for the use of the proposed tariff incentives in order to minimize the role of government; and (iii) the treatment of tariff protection incentives during the period July 1 to December 31, 2021.
Sources say the CCoE may also approve the new circular debt management plan (CDMP) before sharing it with the International Monetary Fund (IMF) and the World Bank. A summary on Payments to Independent Power Producers (IPP) 2002 is also expected to be submitted to the CCoE as the Implementation Committee (IA) headed by the Minister of Finance has approved it. However, a commitment will be obtained from Nishat Chunian that if the excess amount is determined above and around Rs 8.6 billion as determined by the NAB and the IPPs committee, then he must pay.
Other items on the CCoE agenda are: (i) proposal to revise the plan approved by Cabinet for the closure of power plants (Gencos); (ii) Advanced metering infrastructure (AMI) financed by ADB to Iesco, Lesco, etc. (iii) political orientation for the operation of LNG plants on merit; (iv) a monthly report sheet for power plants operated on merit (mainly for an economic distribution constrained by security); and (v) comparison / review of the Terms of Reference (ToR) of the CCoE and the ECC Charter.
Copyright Business Recorder, 2021