PSO initiates discussions with Chinese organisations to explore mega investment plan

Islamabad: Pakistan State Oil (PSO) has initiated discussions with the Bank of China and Chinese Sinopec company to explore the possibility of a mega investment plan.

The proposed US $10 billion green refinery project incorporates a novel green refinery policy offering a package of incentives, including a 7.5% duty for a period of 25 years and a generous 20-year tax holiday, Pakistani officials said.

The recently established Special Investment Facilitation Council (SIFC) has been tasked with evaluating Sinopec’s interest in the project and streamlining the necessary approvals if the Chinese corporation gives a nod.

The proposed refinery, to be located in Hub, Balochistan, has the ambitious goal of producing 8 million tonnes of diesel and 6 million tonnes of petroleum annually.

The financing structure of the project is anticipated to be based on a 30:70 equity-loan ratio, where Saudi Aramco and Pakistan will jointly share the equity, while loans will be secured through international financial institutions.

It is worth noting that the China Road and Bridge Corporation (CRBC) previously signed a memorandum of understanding (MoU) with the Pakistani government for the refinery’s construction under the Engineering, Procurement, and Construction (EPC-F) model.

However, the Pakistani government is now actively seeking to involve Sinopec in the project due to Saudi Arabia’s interest.

The refinery will be authorized to export surplus petroleum products, if they meet the domestic demand requirements and receive approval from the Oil and Gas Regulatory Authority (OGRA).