12/10/05 (Daily Times) - KARACHI: Some four edible oil refineries arelikely to start operations early next year, which would help to reduce thecountry’s edible oil import bill significantly.

Three of the edible oil refineries are being set up as joint ventures andthe fourth by foreign investors.

A senior official in the ministry of food, agriculture and livestock andindustry sources said each refinery would have the capacity to refine3,000 tonnes a day, mainly palm oil.

"Work on a couple of refineries has already begun," said the official, whoasked not to be named. “The first one is being set up at Port Qasim undera joint venture between Pakistan and Singapore for which a deal was signedbetween the Port Qasim Authority and the investor company."

He said the refinery, with storage facility, was being set up at anestimated cost Rs 624 million and the Singaporean investor company hadentered into the agreement with Port Qasim Authority for the setting up ofthe unit.

"According to the agreement, 45 percent cost of the project will be borneby the Pakistani investor and 55 percent by the Singapore firm Wilmar,"said the official.

The officials and industry players believe the setting up of refinerieswould encourage crude edible oil import, which is much cheaper in terms ofcost than the refined product.

The importers say imports of crude palm oil are cheaper by $35 a toncompared with the import of refined palm oil and refining within thecountry provides business opportunities to domestic companies andgenerates employment for the local population.

"The other projects have also been designed for Karachi in the sameindustrial area," said the official. "Two of them have been initiatedpurely by local investors whereas one has some foreign stakes."

He said for the first project 14 acres of land in oil installation area ofPort Qasim had been bought from the PQA, which would be completed by firsthalf of 2006.

The refinery would import edible crude oil mainly from East Asiancountries and reproduce refined palm oil, which is consumed by gheeproduction units in the country.

"It is being planned that one of the refineries would include aghee-manufacturing factory, which would also consume such refinedproduct," said the official.

The authorities are of the view that availability of the locally-refinedpalm oil would reduce the cost of production of cooking oil and ghee inthe country by around Rs 1,800 a ton.

Around 2.5 million tonnes of edible oils are consumed in the countryannually, out of which 1.5 million tonnes are imported. Imports so farcomprises of around 1.3 million ton refined, bleached and refinedpalmolein, 150,000 ton refined palm oil and 50,000 ton soy oil.

"The local investor has already storage terminals in the oil installationarea," said the official. "The imported edible crude oil would be directlytransferred through pipeline to the oil terminals and would be supplied,after the customs clearance, to the refinery for processing." He said thecompanies had also sought Malaysian technological assistance for settingup the refineries and East Asian experts had designed the modern refineryplants for Pakistan.

"Like India, we also think it will be economically more viable andproductive to import crude palm oil and refine it within the countryinstead of directly importing refined oils," said the official.