In Pakistan, four oil refineries have submitted upgrade plans with a total value of $4.2 billion. They are Attock Refinery, National Refinery, Cynergico and Pakistan Refinery Ltd. This was reported in a Dawn column devoted to plans for reforming the country’s energy sector.
Pakistan’s petroleum minister previously said that local refineries can process only the sweetest grades of crude oil, which, in his words, indicates the use of basic technologies. He stressed that after modernization, the country could potentially export petroleum products.
The column’s author believes that Attock Refinery has the financial indicators needed to implement such a project above all. Its plan is estimated at $600 million, or approximately 1.5 times its equity. At the same time, the cost of the projects of the other three refineries, according to the author’s estimate, is seven to 25 times higher than their equity.
According to the author’s calculations, Attock Refinery could finance about 30% of its share in the project from available funds, while the remaining amount would equal 2.9 times its EBITDA. The company may also need support to finance National Refinery, in which it holds a 25% stake. Other refineries may need assistance from multilateral lenders or export-import banks, the author believes.
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The author links the Pakistani finance minister’s meeting with representatives of the U.S. Export-Import Bank to the search for resources for refineries, Pakistan International Airlines and the Reko Diq project. He also notes that there are currently no grounds to believe this would create state liabilities for the country.
In August, the Cabinet of Ministers ratified the Refinery Upgradation Account mechanism, which refineries can join to implement upgrade programs. Its rules provide for projects to be completed within five years, incentives for early completion, penalties for delays and an exemption from sales tax for modernization equipment.
Funds received through the incentives will be kept in an account managed by the ministry. Refineries will be able to receive them after confirming compliance with the terms of use. The author notes that the rules are intended to prevent a repeat of alleged abuses of the inventory-building incentive during Pervez Musharraf’s rule, which were mentioned in a 2009 judicial commission report.
The column also separately mentions the March spectrum auction for the launch of 5G in Pakistan: three major telecommunications companies bought frequencies for $500 million. The terms provide for 5G to be launched first in Islamabad and in ten cities across the country by 2030.
Source: UA
