Commonly referred to as the lifeblood of the modern economy, crude oil is a primary raw material for key economic activities and holds a cardinal status in supporting economic growth of any country. For an energy-intensive growing economy like Pakistan, oil is akin to the country’s sustained economic acceleration and development and is also a matter of its national security. From an economic perspective, Pakistan is a developing country counting on oil and petroleum products as its biggest import item. Just as other countries with low or no oil production, Pakistan is predestined to meet its rapidly-expanding energy needs with large quantities of such oil imports such as petroleum, gasoline and diesel.
The role of oil refineries against this backdrop is of paramount importance as refineries play a pivotal part in meeting the country’s energy requirements by processing raw fuel stock into finished material. In doing so, they save millions of dollars in terms of foreign exchange for the country by refining, finishing and producing the entire spectrum of petroleum products. Apart from saving sizable foreign exchange, refineries provide direct and indirect employment to tens of thousands of professional, skilled and semi-skilled people, contributing billion rupees annually to the national exchequer in taxes, duties and levies.
Currently, Pakistan has five refineries: Parco, Attock Refinery, Pakistan Refinery, Byco Petroleum and the National Refinery. However, much to our regret, news is making rounds that a catastrophic proposal has been given by the chairman of Expert Group on Petroleum to the Pakistan government for shutting down three oil refineries, namely Pakistan Refinery, Byco Petroleum and the National Refinery. Producing kerosene oil and jet fuel, the three refineries together have been playing a decisive role to strengthen Pakistan’s energy security as they are able to meet the country’s strategic requirements through import, processing, distribution, marketing, and conservation of petroleum products.
Formed by the Economic Advisory Council of the Government of Pakistan, the Expert Group on Petroleum is an independent body that advises the government on business matters and policies related to the petroleum sector. However, such an indecent proposal has been furnished by the official on the supposed premise that Saudi Arabia and the United Arab Emirates (UAE) would set up new refineries in Pakistan, thus giving no space for the existing refineries to carry on and they must call it a day by ceasing their operations. Lo and behold, nothing is yet confirmed about opening of new refineries by Saudi Arabia and the UAE as there is not a single word uttered at the ministry or government level with regard to such fancied refineries, which seem to exist only on papers and no tangible progress has been made so far in this vein.
In the first place, the ill-advised proposal to shut down the country’s leading oil refineries to pave the way for new ones, reeks of self-serving agendas and vested interests of the unscrupulous mafia of fuel traders and importers, operating behind the scenes to permanently shut down the three refineries. One man’s loss is another man’s gain. Along the same line, the idea of closing down existing refineries, the major strategic assets of Pakistan, could better be termed as a recipe of disaster. Straight to the point, the ill-thought-of move will only benefit the lot of fuel importers and traders and will allow them to have a field day that too at the cost of strangulating the national economy at one go.
As things currently stand today, Karachi ports have been running into a plethora of difficulties to transport oil, particularly since the establishment of liquefied natural gas (LNG) terminals. As a case in point, Pakistan State Oil (PSO) has paid millions of dollars in demurrage charges owing to the congestion at ports and terminals. On top of this, the Ministry of Maritime Affairs is planning to set up two more LNG terminals, which will cause further congestion at ports.
On that account, the imprudent closure of three major refineries will put more strain on Pakistan’s already dilapidated oil terminals and ports and the sinister move will also inflate the country’s oil import bill manifold. The proposal is more frustrating for local oil refineries since some refineries have even shared plans to expand their facilities and have allocated millions of dollars for the forthcoming projects.
A state is never supposed to root out its strategic assets. Being the backbone of an oil-dependent economy, refineries play a leading role in meeting the country’s energy needs as well as by saving millions of dollars in foreign exchange by refining and producing different petroleum products on their own. Thanks to local refineries, Pakistan is able to save billions of rupees every year by importing crude oil at low rates and refining it at home, instead of importing high-priced refined products costing a fortune.
For a developing country like ours, shutting down its long-standing oil refineries embodies a doomsday scenario and can never be considered as a recourse measure. In place of being played at the hands of oil traders and importers, the government must rise to the occasion to safeguard the oil refining sector, which equally deserves a fair shake and an adequate level of protection from the state it serves.