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China to set up $15b oil complex

313ghazi

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ISLAMABAD:
A consortium of Chinese state-owned companies has offered to set up a $15 billion oil refinery complex that may provide some relief to Pakistan, which is grappling with the challenge of huge outflows of foreign investment in recent years.

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, Board of Investment (BOI) Secretary Fareena Mazhar told The Express Tribune on Tuesday.

China Petroleum Pipeline Engineering Company Limited is a subsidiary of the China National Petroleum Corporation and the primary builder of pipelines in China.

The company has planned to set up the refinery in four years at a site, which is not located at any of the nine prioritised Special Economic Zones (SEZs) of the China-Pakistan Economic Corridor (CPEC). But the secretary said that the any company can seek the status of SEZ under the new rules and would be entitled to same taxes and duties concessions available to SEZs. However, the company-specific SEZ would not be entitled for the government-funded 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.

Mazhar said that the BOI would ensure fast-track processing of the Chinese offer and has already requested the Petroleum Division to review the business preposition and respond to it this week.

The BOI makes efforts to bring in foreign investors but they get stuck in undue regulatory approval procedures, said the secretary.

She hoped that unlike the first phase of CPEC, which was largely about loans for energy and infrastructure projects, the Chinese would make real investments under the second phase of CPEC.

Initially, there was expectation that CPEC would supplement the existing foreign direct investment but the numbers speak otherwise. After China started making investments in Pakistan, US was the first country to withdraw or reduce its investment in Pakistan, said Mazhar.

From 2002 to 2012, Chinese investment in Pakistan amounted to $814 million as compared to $5.7 billion the US investment during this period, said the secretary. Between the years 2013 to 2021, the Chinese investment increased six-and-a-half times to $6.1 billion but the US investment dropped three-fourth to $1.5 billion, said the BOI secretary.

To a question about the government’s less focus on bringing the foreign direct investment, she replied that without increasing both the foreign direct investment (FDI) and exports, the country cannot overcome its external sector problems.

After remaining in surplus for few months, Pakistan’s current account deficit has started widening again as the economy showed some positive growth. The official statistics showed that from 2016 through June 2021, foreign investors withdrew $2 billion. The highest amount of $572 million or one-fourth of the total outflows was withdrawn in 2020.

Mazhar said that major investment withdrawal decisions had been taken by the Chinese companies. The Covid-19 outbreak caused huge losses and the companies facing capital shortages withdrew investment from Pakistan as part of their business strategies, she added.

“We have talked with the companies and are hopeful that the situation would reverse in three months, the BOI secretary said.
The Afghanistan situation and terror incidents like attack on Chinese workers in Kohistan are major obstacles to foreign investment in Pakistan. Before Dasu attack, the BOI was expecting $3.6 billion foreign direct investment in this fiscal year, which has now been downward revised to $2.8 billion, she added.

She counted different steps that the BOI took recently to encourage the foreign investors to invest in Pakistan.
The BOI has been encouraging the foreign expats working in Pakistan to apply for work visa. The number of foreign expats seeking work visa has been enhanced from 3,485 in 2019-20 to 5,035 by end of last fiscal year, showing an increase of 44%.
The BOI has also granted permission to 148 companies for opening branch and liaison offices in 2019-20 to 382 in the last fiscal year, showing an increase of 158%. The BOI has facilitated the local and foreign investors by taking up their grievances with the federal and provincial departments.

The secretary said that the China International Investment Promotion joint business portal has been established where the Chinese government recommended companies would share their business proposals with Pakistani authorities. So far 13 Chinese companies have showed interest. An investor relationship management system is also setup for tracking the issues being faced by the foreign investors.

 

Sainthood 101

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Without FDI Pak isn't going anywhere

We are seeing growth in other sectors but the most important indicator after exports is still in shambles

If FDI doesn't increase I would consider it a failure of the current gov
 

BoggedDown

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Pakistan need FDI in export oriented industries. If FDI only for local consumption then it will put pressure on balance of payment.
 

Syed1.

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Some Noony Tunes keep barking about lack of FDI during worldwide pandemic.... why did the FDI from 2013 to 2018 not help grow our exports beyond $25b?
 

ejaz007

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Pakistan's Exports Data:

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crankthatskunk

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Some Noony Tunes keep barking about lack of FDI during worldwide pandemic.... why did the FDI from 2013 to 2018 not help grow our exports beyond $25b?
Those Noonis do not understand that most of that FDI was on machinery imported for the "Power Projects" by IPPS. For which most of the investment came from Pakistani government and rest with State sovereign guarantees given to the private companies.

Those companies debts were never included the official figures.

All that investment has done is to create further burden on the finances of Pakistan by creating even stronger monster of "Circular Debt".
 

Salza

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offer to kick out Saudis from CPEC all together. Their $8 billions Gawader refinery project is still on the table
 

FuturePAF

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offer to kick out Saudis from CPEC all together. Their $8 billions Gawader refinery project is still on the table
Put the Saudis in a parallel US-Led initiative “Build Back Better World” plan by US President Joe Biden, and ask the Saudis to build their refinery in Karachi. The Saudis don’t want to upset the US, and joining their B3W initiative in this manner helps them earn points with the US while being a win for Pakistan. The more refineries we have, the greater the competition to lower prices for domestic consumers.

Chinese Refinery should be in Gwadar, linked to a spur off TAPI and Iranian oil supplies. It can be used to fuel export oriented industries in the SEZ of Gwadar such as Pharmaceuticals and other plastic based products.
 

ejaz007

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Those Noonis do not understand that most of that FDI was on machinery imported for the "Power Projects" by IPPS. For which most of the investment came from Pakistani government and rest with State sovereign guarantees given to the private companies.

Those companies debts were never included the official figures.

All that investment has done is to create further burden on the finances of Pakistan by creating even stronger monster of "Circular Debt".
FDI is Foreign Direct Investment. If investment came from GOP then it was not FDI. FDI is not foreign debt. If it was FDI then no need to provide sovereign guarantees as well.

Circular debt has nothing to do with FDI.
 

Indos

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Pakistan need FDI in export oriented industries. If FDI only for local consumption then it will put pressure on balance of payment.
FDI can also be used for import substitution and grow local workforce capabilities and competence. It should be carefully managed as it can be harmful as well to local companies if there is already local companies strong present in the country or local companies are still in infant phase ( under tariff protection from government )
 

crankthatskunk

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FDI is Foreign Direct Investment. If investment came from GOP then it was not FDI. FDI is not foreign debt. If it was FDI then no need to provide sovereign guarantees as well.

Circular debt has nothing to do with FDI.
Oh OK. I thought FDI stand for "Fazul Direct Investment", thank you for correcting me.
Pakistan government did most of the investment needed locally to establish the plants.
Even the machinery imported for the plants was imported through 25 companies created by Corrupt thug Dar.

Those companies/imports were given sovereign guarantees by the government of Pakistan. So even though the debt was secured by the state of Pakistan, it never shown as official debt in any of Pakistan statistics.

The thief and criminal Dar has fooled Pakistan and international agencies by fudging the figures as he always did.

How do you think that rupee was kept strong and maintained the exchange rate between Rs 100 to Rs 108 to 1 US $ by crook Dar!
 

Patriot forever

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Without FDI Pak isn't going anywhere

We are seeing growth in other sectors but the most important indicator after exports is still in shambles

If FDI doesn't increase I would consider it a failure of the current gov
You have a valid point in general regarding FDI but you need to understand that if you analyze the breakup, the FDI Pakistan got is backed by soverign guranteed returns and is concentrated in certain sectors. At the end of the day this type of FDI actually hurts the country more.
 

ejaz007

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Oh OK. I thought FDI stand for "Fazul Direct Investment", thank you for correcting me.
Pakistan government did most of the investment needed locally to establish the plants.
Even the machinery imported for the plants was imported through 25 companies created by Corrupt thug Dar.

Those companies/imports were given sovereign guarantees by the government of Pakistan. So even though the debt was secured by the state of Pakistan, it never shown as official debt in any of Pakistan statistics.

The thief and criminal Dar has fooled Pakistan and international agencies by fudging the figures as he always did.

How do you think that rupee was kept strong and maintained the exchange rate between Rs 100 to Rs 108 to 1 US $ by crook Dar!
Is this your political statement or any credible data to prove it.

If Dar did all this then why was the inquiry closed against him by NAB.
 

crankthatskunk

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Is this your political statement or any credible data to prove it.

If Dar did all this then why was the inquiry closed against him by NAB.
Nope it is not my political statement, but definitely it is yours.

Here listen to Dr Ishfaq how Dar parked the debt and kept it out of the official debt figures.

 

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