Ministry clarifies news report on oil price system
By Asad Cheema

ISLAMABAD—A spokesman of the Ministry of Petroleum and Natural Resources has contradicted a news item appeared in a section of Press titled “Oil Pricing System under review” attributed to the caretaker Minister for Petroleum and Natural Resources and termed not based on facts and misleading.
Clarifying the factual position the spokesman stated that it is incorrect to say that the orders of the Prime Minister went missing from the official record and remained un-implemented even today as reported in the news item. He said that the rationalization has been done in a phased manner in public interest. He stated that the GST was excluded from the basis for calculation of OMCs/Dealer margins in 2006. During the year 2007, 5% advalorum Custom Duty/deemed duty on SKO and LDO was abolished, 1% Surcharge/deemed duty on SKO, lDO and JP-4/JP-8 was also abolished. Apart from that Rs. O.88/litre Custom duty on MS and HOBC was removed and finally Petroleum Development Levy (PDL) was also excluded from the basis for calculation of OMC’s/Dealer margins in 2007.
The spokesman said that the government is sensitive to the impact of the higher oil prices in the international market on the consumers and has rationalized the oil pricing structure for Refineries and OMC’s by making necessary modifications in the pricing formula to save consumer from the impact of the higher prices. He said that the modifications made, thereof, have reduced the profitability of refineries as well as oil marketing companies by approximately 20%.
He further stated that to attain Euro II standard, the Refineries are committed to utilize their special reserve funds for HSD Desulphurization project, Naphtha Isomerization unit, Furnace oil accreditation project and other up gradation/expansion projects. All these projects are capital intensive, costing over Rs.50 billion as per current estimates. PARCO and PRLs projects to this effect costing Rs. 9 billion and Rs.21 billion respectively are already under Implementation and are planned to be completed over the next 3 to 4 years. Projects of NRL, ARL and Bosicor are also under active stage of finalization costing Rs.20 billion in all.