PAKLINKS BANNER EXCHANGE
Thc Domestic production of oil satisfies only one third requirements of the country and the rest of the demand is being met through the imports at a heavy cost of US$ 1.5 billion per annum.
The Government of Pakistan (GOP) in order to facilitate private sector investment announced .a new Petroleum Policy in March 1994.
A summary of the 1994,s petroleum policy is as follows:
Area and security clearance
No area clearance from the Provincial Government and security agencies would be required for concession blocks define for this purpose.
Block award process
A block award Process (BAP) has been introduced on the basis of competitive bidding for the work Program (WP) Application may be made for a block. In accordance with the laid down grid system and the rules. With out a work Program (WP). Offer the other interested Exploration and Production (E & P) companies will be invited with in specified time of receipt of first application, through press. The first applicant and other interested E&P companies must submit sealed bids specifying the WP and minimum financial obligation in US Dollars.
Local E&P companies investing a minimum of 5% during exploration phase shall be assigned an additional share out of GOP's Working Interest after Commercial Discovery. Local E&P companies will be provided foreign exchange facilities during the exploration phase to meet their day to day obligation under Permits, Licenses and PCAs.
Gas allocation
The GOP will decide within three months of Commercial Declaration in Zone-3 to allocate gas to specific buyers. The gas producers and the specific buyers shall enter into an agreement within six months on "take or pay " basis.
GOP working interest
All PCA's will provide for a 5% interest of GOP during the exploration phase. The expenditure incurred will be reimbursed by the GOP in installments from Commercial Discovery over a period of 5 years.
Producer pricing
The criteria for pricing of the Crude Oil. Condensate Non-Associated Gas. Associated Gas and Liquefied petroleum gas has been defined in the policy based on the prices of products in the international market.
Production bonuses
Production bonuses for all Zones will be payable on a Concession Area basis and will be expended on infrastructure development in and around the Concession Area.
Import/export duties
The policy has prescribed certain exemptions and relief from the fees, duties and levies on
Import/export of plant, machinery and equipment
Income tax
The rates of tax on profit of E & P companies before deduction of payments to GOP and
after deduction of depletion allowance for the three Zones established under the Policy are
50%, 52.5%, and 50% for zone 1, 2 and 3 respectively.
Import export by petroleum sector companies will be allowed on the recommendation of the respective Regulator \ Authority without recourse to other Agencies, Departments and Ministries. The procedure for import and export by the petroleum sector has been simplified and has been prescribed under the policy.
Incentives far local manufacture of petroleum sector items
Local manufacturers will be entitled to all such benefits as are admissible for exports. Local manufacturers are entitled to import, free of duties and levies, such items which are to be incorporated in or are to form part of any item relating to petroleum sector. No Sales Tax will be leviable or payable on items manufactured locally for the petroleum sector.
General Incentives
In emergency conditions which endangers life or property, the relevant Regulatory Authority will allow import of any item considered necessary to deal with the emergency without formalities, which will be attended to there after. Employment, Training and Welfare Program
Foreign and local E&P companies are required expend the prescribed amounts during Pre-commercial Production and Post Commercial Production stage on training and welfare programs