Chinese Investors Reluctant to Invest in PRL
Staff Report
Islamabad: Chinese investors have refused to invest in the upgradation project of Pakistan Refinery Limited (PRL) due to multiple issues in the refining sector.
At present, refineries have been facing different issues like the impact of sales tax exemption and the delay in the implementation of the refinery policy aimed at giving incentives to refineries for projects.
There has been a delay in the implementation of the Brownfield Refineries Policy 2023 that was approved by Prime Minister Shahbaz Sharif, enabling refineries to start work on upgradation projects.
These refineries were to sign implementation agreements with the Oil and Gas Regulatory Authority (Ogra). But these refineries had not been able to sign these agreements so far, as a new issue surfaced that had derailed all upgradation plans of oil refineries.Refineries’ Margins Decline
Now, the refineries were expecting to face a loss of Rs 34 billion during the current year due to the sales tax exemption issue. Foreign investors had informed the refineries in Pakistan that they would not invest in upgradation projects unless the government resolves the issues being faced by the refineries.
Pakistan Refinery Limited (PRL) had floated a tender in December last year to invite bids from investors, mainly from China, but not a single party had participated in it.
It had floated a tender again, and now the deadline for submitting bids was May 30. But the PRL was not too hopeful that Chinese investors would participate in it due to the issues these refineries are facing.
The Oil Companies Advisory Council (OCAC) had been lobbying the government to resolve the issue of sales tax exemption, but the petroleum ministry had not pleaded a case well before the highest level.
This was a reason that the issue had not been resolved yet.
Earlier, former minister Musadik Malik was not interested in resolving this issue, and the new minister did not seem much interested in resolving this issue.
The new petroleum minister, after taking charge of the petroleum ministry, had called a meeting of oil refineries several times but postponed meetings every time.
Now, the refineries were expecting that issue could be resolved in the upcoming budget 2025-26.
