Minister of State for Petroleum Musadik Malik said Thursday that a $10 billion investment in Pakistan’s refinery sector will be made ‘very soon’.
The state minister was unable to share more details on the matter but said that Prime Minister Shehbaz Sharif will inaugurate the investment very soon. This comes after the government approved a new refinery policy aimed at encouraging greenfield investment.
“Looking at our population, we need a GDP growth of 5 percent on a sustainable basis. To achieve this growth we require 7.5-10 percent growth in the energy sector every year,” the minister said while addressing a ceremony.
He added that the coalition government intends to sign a comprehensive energy agreement with countries such as Central Asian states and Russia. The public will be made aware of such an agreement by the end of this year, he mentioned.
Malik went on to say that the government seeks to reshape Pakistan’s historic ties with Gulf Cooperation Council (GCC) nations and to meet domestic energy requirements by working with these countries, including LNG and petroleum products.
Regarding Russian crude, the minister said the purchase of the fuel will help Pakistan. Low-cost energy would encourage industrialization and help authorities establish small industrial areas for value addition in rural areas, he added.
According to the minister, many countries cannot afford to have certain industries because their factor input cost-labor cost has risen substantially. “We would like to present Pakistan as a country that has the infrastructure, labor force and technology,” he added.
Separately, the state minister told reporters that the government is beefing up border controls to combat Iranian oil smuggling. “In the coming days, the flow of smuggled oil will reduce,” he stated.
It bears mentioning that smuggled Iranian diesel is reportedly causing a staggering revenue loss of Rs. 10.2 billion per month to Pakistan’s economy.
The main reason behind the availability of smuggled diesel in Pakistan is the price differential between Iranian and domestically produced diesel. Iran heavily subsidizes domestic fuel prices, making it cheaper for Iranian sellers to smuggle diesel into Pakistan and sell it at cheaper rates than domestically produced diesel.