POL output down by 9.2pc

KARACHI - The below capacity operations by Independent Power Producers (IPPs) due to mounting circular debt, postponement of oil import orders amid declining crude oil prices and obstacle in confirmation of LCs for oil import in the wake of liquidity crunch, resulted in POL production decline of 9.2 percent during the Jul-Mar FY09, according to the SPB quarterly report.
The reduction in deemed duty from 10 percent to 7.5 percent in July 2008 led to lower margins and sales revenues also reduced POL production.
It is worth mentioning that the POL sector is the third largest contributor to lacklustre performance of Large Scale Manufacturing (LSM).
According to Oil Companies Advisory Committee (OCAC) data, POL production decline may primarily be attributed to weak demand due to sluggish economic activities. This is also due to lower quantum of imports for POL during Jul-Mar FY09 in comparison to last year.
The POL production will get boast in the coming year, according to the report, as the partial resolution of circular debt issue and resumption of production by Attock Refinery is a positive measure. Moreover, recently announced Petroleum Policy offers incentives that would probably attract more investment and help sustained growth in this sector.
Pakistan’s current crude oil production meets only 18 percent of its demand, while the remaining requirement is met through imports, adding to the trade deficit and, in turn, has adverse consequences for forex reserves and exchange rate. Keeping this thing in focus, the government of Pakistan has announced a comprehensive policy to promote exploration and production (E&P) in the petroleum sector. The policy adopts an integrated approach towards exploitation of domestic petroleum reservoirs while ensuring environmental sustainability.