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ECC gives approval Parco to be issued LOS for while oil pipeline project

T A Malik

Islamabad: The Economic Coordination Committee of the Cabinet (ECC) gave its approval for the issuance of Letter of Support (LoS) to Pak-Arab Refinery (Parco) and directed to complete the $600 million white oil pipeline project by 2002.

The ECC, which met here with Finance Minister Shaukat Aziz in the chair on Tuesday, was presented a report on the white oil pipeline project, a joint venture between the governments Pakistan and of Abu Dhabi.

Sources said the government had accepted the revised lowest bid of Parco in February last year after cancelling the Letter of Intent (LoI) issued to Asia Petroleum Limited (APL) as the latter had demanded performance guarantee equivalent in Pak currency, which was not acceptable to the government.

An earlier Memorandum of Understanding (MoU) with a consortium of five companies, namely Shell, Caltex, PSO, Army Welfare Trust and Parco, signed by the PPP government, was cancelled by the Nawaz government before the consortium members could formally sign the agreement.

About 800 km long Karachi (Port Qasim) to Mahmood Kot (Multan) white oil pipeline project is vital for Parco refinery in Multan.

The two projects - the pipeline and the refinery - are interdependent, as crude oil coming from Karachi will be refined at the Multan refinery, completion of which is almost on schedule, sources said.

The estimated quantity of white oil available throughout for the pipeline will be initially around five million tonnes, increasing to about 12 million tonnes by the year 2010, with an offtake at Shikarpur.

The pipeline project is already behind schedule by over one year, and further delay might cause the government losses in billions of rupees in the form of transportation charges of crude oil. According to the original plan, the white oil pipeline project should have been ready before September 2000 when Parco refinery would be completed, sources said.

The ECC also reviewed the overall cotton situation and expressed satisfaction at the likely crop size estimated to be around 10.5 million bales.

It directed the ministry of commerce to ensure that any profit made by TCP from its cotton procurement operation should be used towards the welfare of growers. The mechanism for this purpose will be worked out and presented to ECC for its approval.

The ECC also expressed satisfaction over the efforts by TCP in stabilising cotton prices through its procurement operation as a second and active player in the market. The meeting was informed that TCP has been able to line up export contracts of cotton at reasonable prices.

The Committee was informed that the stock position of POL, wheat, fertilizers and other essential commodities was satisfactory.

It was also informed that the government of Punjab had offered 300,000 tonnes wheat to Centre for sale. This quantity is in excess of the province's requirements.

In view of this development, the ministry of food & agriculture is re-considering its plan of further wheat import, the committee was informed.

The ECC reviewed the prices and availability of essential items in the country and noted that the kitchen items index indicated general stability in prices and the annualised change in kitchen items index on week to week basis worked out to be minus 1.86 percent over the period July, 1999-February 2000.