ISLAMABAD - A Sharjah-based consortium is believed to have approached Chief Minister Khyber Pukhtunkhwa and offered to invest in setting up oil refinery in Kohat, sources said.

Sources told The Nation that representative of the Sharjah-based group of companies met the Chief Minister last week and offered an initial investment of $250 million.

The proposed refinery would initially produce twenty thousand barrel oil per day which will be enhanced to forty thousand barrel per day in two phases. The Sharjah based investors would also establish thermal power houses in the province.  Last year, the state-owned oil marketing company Pakistan State Oil (PSO) also signed a Memorandum of Understanding (MoU) with the Government of Khyber Pakhtunkhwa (GoKP) for the establishment of an oil refinery in the province.

According to the MoU, PSO would set up a technologically advanced refinery with a capacity of 40,000 barrels per day (BPD) on about 400 acres of land in district Kohat-Khyber Pakhtunkhwa.

The project was envisaged to be set-up through a public-private partnership and would utilise crude oil from nearby indigenous supply sources. The project was expected to be fully commissioned by 2016-17, a statement by PSO said.

The MoU was signed by Additional Secretary, Ministry of Petroleum and Natural Resources Naeem Malik, PSO Managing Director Naeem Yahya Mir and GoKP Secretary Energy and Power Zaffar Iqbal. Also present were KP Chief Minister Tariq Pervaiz Khan, Minister for Energy and Power Muhammad Yunis Marwat and a team of PSO officials.

The project will be set-up through a public private partnership and will utilise crude oil from nearby indigenous supply sources for production of POL products conforming to Euro IV standards. The multi-million dollar project is expected to be fully commissioned by 2016-17.

Establishment of this refinery will help improve overall availability of POL products across the country as well as result in sizeable foreign exchange savings for the nation.  It shall also increase PSO’s operational base through diversification in the midstream segment and lower distribution cost in the related supply envelopes.

In addition to these benefits, this refinery will also help create job opportunities for the local populace as well as professionals from various technical backgrounds.  It is also expected that substantial foreign direct investment will also take place as a result of this project.

According to PSO, the projected cost of the refinery was $700-$800m. It would be financed by mix of debt and equity in the ratio of 80:20.