ISLAMABAD - Empowered by the 18th amendment the Khyber Pakhtunkhwa government is all set to realise its dream project - the installation of the first oil refinery in the province after a multinational company was allotted land in District Kohat.

The KP government has allotted land in Khushal Garh area of district Kohat to SPEC for the installation of the of the province first oil refinery, an official source told The Nation here Friday. According to the 18th amendment, passed by the Parliament in April 2010, the oil and gas producing provinces are entitled to have 50 per cent ownership on oil and gas and mineral resources in their respective regions.

When contacted the Chief Executive Officer of KPOGCL, Raziuddin, confirmed that six companies including, SPEC, PSO, Shezad International, Bin Ziyad group and Khyber Refinery, are in row for the installment of the oil refinery. He said beside these companies one international company is in direct contact with the federal government.

Out of six companies only SPEC fulfill section four of the investment criteria as it is ready to buy a land worth Rs 180 million in Khushal Garh Kohat, he said adding district administration Kohat has allotted the land for the purpose, he informed. If a company is ready to invest such a huge amount in land buying it means they are serious in the installation of the refinery, Raziuddin added.

According to the detail earlier the KP government was failed to develop consensus on the site for the construction of oil refinery. The land for the construction of the oil refinery was short-listed but due to political backlash the KP government was unable to give final verdict about the refinery final site. Different perspective sites were short-listed for the proposed refinery, including Khushal Garh and Shakardara in Kohat and Karappa in Karak.

It was very hard to decide the site for the refinery because the issue was politicised and MNAs and MPAs from the ruling PTI from Karak and Kohat districts wanted to establish the refinery in their respective districts.

According the point of view of the people of Karak, since the oil wells are located in Karak therefore refinery should be constructed in Karappa. According to their view Karappa is the most suitable location for the refinery as it is located only 10 kilometers away from the main gas and oil fields of Noshapa-Karak and thus an oil supply line would be easier to build. On the other hand two PTI member provincial assemblies from Kohat were lobbying to make the refinery built in their constituency at Khushal Garh. The Kohatian were of the view that due water scarcity in Karak district the refinery will face water supply problem.

It is pertinent to mention here that an MoU with PSO regarding the installation refinery with a capacity of 40,000 barrels per day (BPD) on about 400 acres of land in district Kohat-Khyber Pakhtunkhwa was signed by the interim government of KP. After the PTI government victory in the provincial general election 2013 the project was shelved and the provincial government started searching other investors for the purpose.

After the pursuance of the provincial government Sharjah based MNC, SPEC has formally offered KP government to establish oil refinery at any suitable location between Kohat and Karak. The total cost of the refinery, with the refining capacity of 4000 BPD, is $700-$800 million. The SPEC will develop the project in three phases and initially invest $250 million. In the first phase the refinery will refine 20000 barrels of crude oil per day and will produce LPG, petrol, kerosene, jet fuel, diesel, furnace oil, pitchwoman asphalt and other products. In next two phases, the refining capacity would be enhanced to 30000 to 40000 bpd, the official maintained.

KP producing about 45000 barrels of oil per day which is almost 50 percent of the total oil production of the country. Due to the unavailability of the oil refinery in KP the crude oil is being transported to the refineries in Attock or Karachi. Besides creating employment opportunities for the people of the impoverished southern districts of KP, the refinery would help improve the overall availability of POL products across the country as well as help in saving sizeable foreign exchange, the official maintained. According to one estimate Khyber Pakhtunkhwa has natural gas recoverable reserves of some 9 Trillion Cubic Feet and oil reserves exceeding 500 million barrels.