Oil refineries seek bailout package.

Byline: Khaleeq Kiani

ISLAMABAD -- Claiming over Rs31 billion inventory losses in two months and negative processing margins, the country's five oil refineries have sought a compensation-cum-bailout package from the government to sail through difficult times.

'An urgent relief package is required from the government for an interim period to ensure sustainability of renery operations failing which it may cause some irreversible damage or nancial collapse of reneries,' said a joint letter by all the five refiners to the ministry of petroleum, warning that otherwise it would result in massive unemployment in rening and allied industry in addition to compromise on energy security of the country.

Local reneries currently meet over 60 per cent of petroleum products requirements of the country. These include Byco Petroleum, Attock Refinery, Pak-Arab Refinery, Pakistan Refinery and National Refinery.

They said the slowdown or shutdown of any renery in the country had serious ramications including product shortages, dry outs, port constraints and heavy strains on country's precious foreign exchange due to import substitution. This is also essential for maintaining energy security of country and catering to defence energy needs indigenously.

The managements of the refineries have reported to the Petroleum Division that business environment of the country during the last two years had remained very challenging and disturbing for refining. The unprecedented devaluation of Pak rupee against the US dollar, overall decline in sales of petroleum products especially furnace oil sales and its pricing due to change in its specication by International Maritime Organisation 2020 (IMO-2020) for shipping lines, low demand of fuel Oil in power sector and weak international prices have been the major contributors adding to the nancial difficulties for the reneries. All put together these factors have put 'survival of the entire Pakistan's rening industry at stake'.

The refiners claimed all these issued had been taken up with Petroleum Division from time to time with the request for intervention towards resolution of these issues. Despite all the serious challenges, the reneries were committed to undertake and upgrade their respective reneries. However, a comprehensive policy framework of incentives for...