Three edible oil refineries to be set up at Port Qasim

[LahoreEstate]

ISMAIL DILAWAR
KARACHI (February 18 2009): At least three edible oil refineries are likely to be established in the 12,000-acre industrial zone of Port Qasim within next few months at an estimated cost of Rs 450 million. In view of a fast-flourishing edible oil refining sector of Pakistan, the Malaysian Palm Oil Board (MPOB) has recently signed a five-year deal with Pakistan Edible Oil Refiners Association (PEORA) on technical co-operation to help the local refiners maximising their yield by 94 percent.

According to well-placed sources the establishment of two to three moderate-size edible-oil-refining facilities were expected at Port Qasim as soon as June this year. They said that according to a rough estimate each refinery would cost the investors around Rs 150 million.

They said out of the three, one refinery of 300 tonne per day capacity would be developed at Port Qasim, where 9 such facilities are functional at present, within next three months. While "ground work" for the construction of remaining two facilities was underway, they added.

But, Chairman PEORA Mian Muhammad Hanif has expressed the concern that heavy government tariffs on crude oil were likely to put adverse impact on future investment in the infant industry. Confirming the plan to set up two to three refineries at PQA, the chief refiner said "it would become difficult if the government did not reduce the duties".

Another PEORA official, complaining of an unattractive tariff regime, said that the refiners were breathing hard under the heavy taxes, like Rs 9,100 per tonne on crude oil, 16 percent GST, Rs 1000 federal excise duty and 2 percent advance income tax.

"The new refineries are expected, but there are many ifs and buts as the government tariffs are not so attractive," he added. At this juncture which, he said, was a "saturation point" there was a strong need to bring duty on crude oil down, as only this would convince the profit-conscious investors to go to the refining sector.

Pakistan imports 2.5 million tons of crude palm oil/refined palm oil/olien/crude soybean oil, and produces the meagre 0.5 million tons locally to meet its 3 million tons consumption demand. The agricultural country also imports about one million ton of oil seed that gives about 0.4 million tons of soft oil.

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