Pakistan cabinet approves summary of multi-billion dollar Saudi oil refinery deal

Saudi Arabia has agreed in principle to invest in a new state-of-the-art oil refinery in Pakistan, it was announced Thursday. (Shutterstock/photo)
Updated 04 October 2018

Pakistan cabinet approves summary of multi-billion dollar Saudi oil refinery deal

  • After Saudi multi-billion dollar investment in Pakistan, the has also shown interest to invest in an oil refinery, says Petroleum Minister
  • The governments of Pakistan and KSA are set to formally sign the deal by early November

ISLAMABAD: Saudi Arabia has agreed in principle to invest in a new state-of-the-art oil refinery in Pakistan, it was announced Thursday. The governments of both countries will reportedly sign a formal agreement by the end of this month or early in November.

“It is good news for Pakistanis that Saudi Arabia is going to invest billions of dollars in Pakistan’s oil and gas sector,” Information Minister Fawad Chaudhry said while addressing a press conference along with the Minister for Petroleum Ghulam Sarwar Khan.
“Saudi Arabia has declared its interest in immediately investing in a new oil refinery in Pakistan, and our cabinet today approved a summary for it,” Khan said.
In what would essentially be a government-to-government agreement, Khan said that state-owned Pakistan State Oil (PSO) will partner with Saudi state oil giant Aramco for the project.
“The Saudi energy minister will visit Pakistan by the end of this month or the beginning of next month to sign a memorandum of understanding for the refinery,” Khan announced.
The minister said that the refinery will be established in Gwadar, a deep-sea port in Baluchistan province, and details related to its cost and capacity have yet to be finalized.
A Saudi delegation led by Adviser on Energy Ahmad Hamed Al-Ghamdi is currently visiting Pakistan to explore different areas for investment.
The petroleum minister said that Pakistan has offered at least more four projects to Saudi Arabia for investment, including two multipurpose pipelines and exploration of oil and gas reserves in the country.
“We have asked Saudi Arabia to invest in the drilling sector too, because they have rich experience of it,” he said, adding that further talks on that matter would be held with Saudi Arabia’s energy minister.
Khan said that his government has also invited the United Arab Emirates to invest in Pakistan and claimed that the Emirates have also shown interest in investing in an oil refinery.
“We need at least four to five new oil refineries in our country to fulfill our demand,” he said, adding that Pakistan is ready to welcome other countries’ investments, including Russia and China.
The minister said that he has not talked to the visiting Saudi delegation about acquisition of petroleum products from the Kingdom on deferred payment.
“The Saudis have welcomed all our suggestions,” he said. “They have even said that if Pakistan moves one step, they are willing to take two steps.”
He also dispelled the impression of any Chinese concern over Saudi investment in Pakistan. “There is no truth in this news,” he said.
The development regarding Saudi investment in the oil refinery in Pakistan comes weeks after a maiden visit of Prime Minister Imran Khan to Saudi Arabia where he held talks with King Salman bin Abdul Aziz Al Saud and Crown Prince Mohammad Bin Salman, among others.
“Prime Minister was accorded a warm welcome in Saudi Arabia,” Petroleum Minister said, “Saudis had shown a keen interest in investment in Pakistan during the high-level meetings there.”

Government presents mini-budget to boost exports, facilitate agricultural financing

Updated 23 January 2019

Government presents mini-budget to boost exports, facilitate agricultural financing

  • Tax on loans for agriculture, SMEs reduced from 39 percent to 20 percent
  • Economists urge the government to ensure strict implementation of all measures

ISLAMABAD: Finance Minister Asad Umar on Wednesday presented the third finance bill for the current fiscal year in the National Assembly of Pakistan, claiming it would boost investment, manufacturing and exports, and facilitate agricultural financing to promote economic activities in the country.

As opposition lawmakers chanted slogans against the government, the minister said he was presenting an “economic reforms package” to address the needs of the people.

“We are committed to helping deprived segment of the society and it is our constitutional responsibility to bridge the gap between the rich and the poor,” he said.

The minister also announced that he would present the “Medium Term Economic Framework” in Parliament next week to boost investment, manufacturing and agricultural produce in the country.

Umar said his government had identified four variables to fix Pakistan’s ailing economy. These included: balancing government’s revenues and expenses; increasing exports that recently plummeted from 14 percent of the GDP to 7 percent; encouraging foreign direct investment; and boosting national savings from 10.4 percent which, he added, were the lowest in the world.

To achieve all these targets, he announced to slash tax on small and medium enterprises and agricultural loans from 39 percent to 20 percent, abolish withholding tax on banking transactions for tax filers, and remove import duty on newsprint.

He said that duty on diesel engines for agricultural purposes was also decreased to five percent. Other than that, abolition of Gas Infrastructure Development Cess on fertilizers would help reduce prices of urea for 200 rupees per bag.

After approval of the Finance Supplementary (second amendment) Bill 2019, non-tax filers will be able to purchase cars up to 1300cc, though the tax will be increased for them.

Tax would also be increased on imported vehicles above 1800cc, he said, adding that tax for low priced imported mobile phones would be decreased but remain the same for expensive imported phones.

To promote low-income housing, the minister announced a revolving fund of five billion rupees for interest free loans, while tax on wedding halls up to 500 square feet would be decreased from 20,000 rupees to 5,000 rupees.

The government has also announced a five-year tax exemption on manufacturing of all products related to renewable energy, including solar panels and wind turbines.

The finance minister announced to abolish super tax for non-banking companies and on bids for sports franchises until profitability, while withholding tax on trading in the stock exchange, he said, had also been abolished.

To encourage exports, the minister said that a scheme of promissory notes was being introduced for businessmen and exporters that would help them get concessionary loans from commercial banks.

Criticizing the opposition earlier, the minister accused them of leaving the country indebted with 2,500 billion rupees to 3,000 billion rupees in loans that were not shown in the books.

However, members of the opposition parties were not impressed by the new finance bill.

“There is nothing in this budget that will generate economic activity in the country,” Pakistan Muslim League-Nawaz leader, Mohammad Zubair, told Arab News. “The government has announced tax reductions in different fields, but it is yet to be seen how this will affect revenue collection.”

Pakistan Peoples Party’s former finance minister, Saleem Mandviwala, said the budget was just a “plethora of numbers” and there was nothing in it for the common man.

“The government just wanted to show its performance by bringing the mini-budget. But it has badly failed to address the genuine issues of people,” he said while talking to Arab News.

Senior economist, Dr. Athar Ahmad, termed the budget “a step in the right direction,” saying that all these measures were needed to fix the economy.

However, he pointed out that the finance minister had failed to introduce any incentives for booming IT industry and measures to increase tax revenue. “The actual test of the government now is to ensure strict implementation of all the announced measures to achieve the targets,” said Dr. Ahmad.