China plans to setup an oil refinery in Pakistan. A consortium of Chinese state-owned companies has offered to set up a $15 billion oil refinery complex. It may provide some relief to Pakistan, as the country is grappling with the challenge of huge outflows of foreign investment in recent years.
Currently, Pakistan has only 5 major refineries with combined installed capacity of less than 420,000 barrels per day. The Pak Arab Refinery is the largest in Pakistan. This refinery was established in 1974. Pakistan imports refined oil in large quantities. This is due to lack of capacity of local refineries. Thus, the Chinese investment will also help stabilize the trade deficit in coming years.
First Chinese Oil Refinery in Pakistan
The China Petroleum Pipeline Engineering Company LTD (CCP) and China Zhen Hua Import and Export Corporation have shown interest to invest $15 billion in oil refinery complex. The news came up from the Board of Investment (BOI)
Secretary Fareena Mazhar.
China Petroleum Pipeline Engineering Company Limited is a subsidiary of the China National Petroleum Corporation. It is the primary builder of pipelines in China.
The company plans to set up the refinery in four years. However, the site for refinery is not in any of the nine priority Special Economic Zones (SEZs) of the China-Pakistan Economic Corridor (CPEC). Moreover, the BOI claims any company can seek the status of SEZ under the new rules. It would be entitled to same taxes and duties or concessions available to SEZs. However, the company-specific SEZ would not entitle for the government-funding provision of utility services.
China is the third country that has showed interest in setting up an oil refinery in Pakistan after the United Arab Emirates and Saudi Arabia. The first two proposals have so far remained on paper.