KP govt backs out of contract for oil refinery in Kohat

PESHAWAR: The Khyber Pakhtunkhwa government has wound up its much-trumpeted mega project at least for the time being as it cancelled contract with a firm for setting up the oil refinery in Kohat.
The sources, who also provided a copy of the minutes of the meeting wherein Chief Minister Pervez Khattak issued directives for the cancellation of the contract, said the firm had also backed out of the contract after differences appeared between the parties over the requisition of land at Khushalgarh to set up the $400 million refinery with the capacity of refining approximately 20,000 barrels per day that was to be raised to 50,000 in future.
The sources claimed that keeping in view the requirements and codal formalities of the project it seemed the Pakistan Tehreek-i-Insaf (PTI)-led coalition government had lost the opportunity to undertake this mega project in its ongoing five-year term.
The sources also linked the decision of the government to the interest shown by another firm, which is already involved in oil exploration in the southern districts of the province, to set up the refinery.
However, the sources said that vice-chairman of the Khyber Pakhtunkhwa Board of Investment and Trade (KPBOIT), Mohsin Aziz, had asked the two firms to set up separate refineries as the province had enough oil production to feed both the units.
They said the oil refinery was among 18 other projects that the KPBOIT showcased on February 25 this year in Dubai for the investors. The Spec Energy, UAE, through its Managing Director, Faiz Ahmed, had signed a Letter of Interest (LoI) for the project with the provincial government.
The Spec Energy team visited Khyber Pakhtunkhwa in its private plane and met the chief minister, who is also chairman of the KPBOIT, Mohsin Aziz, and above all PTI chairman Imran Khan to discuss the project, the sources added. They said the Spec Energy proposed to the provincial government to set up the project in partnership with it or acquire land for the firm to establish the refinery in the oil-rich southern parts of the province.
The provincial government, however, turned down the firm’s offer for partnership in the project and instead agreed to acquire land for the refinery in Kohat.The Spec Energy also approached the federal Ministry of Petroleum for no objection certificate (NOC) for the project. However, according to the officials familiar with the issue, the firm was informed by the federal ministry that NOC was not required for the project.
According to the officials, the ministry gave the “go-ahead signal” to the firm to set up the project first and then apply for the allocation of crude oil quota to run the refinery.The firm, the sources said, had identified around 400 acres land in Khushalgarh, Kohat and completed feasibility so that work on the project could be started by the end of this year.
However, the sources said that at the same time the firm asked the provincial government to impose Section-4 in the area so that land could be acquired at the market rate without any litigation.Nevertheless, as shown by the minutes of the 7th meeting of the KPBOIT recently held at the chief minister’s office, the provincial government suddenly changed its mind.
Giving his decision on the agenda item regarding the establishment of the “Oil Refinery in Kohat” the chief minster directed that “no firm should be given any project and no land must be transferred in the name of any firm/company/investor who has not obtained necessary NOC from the federal government.”The minutes of the meeting said: “In this regard, the chair clearly directed [authorities] to cancel the contract given to a firm regarding establishing oil refinery in Kohat.”