14/2/06 KARACHI (Daily Times)  -  The country is likely to import 900,000 metric tons of crude palm oil in 2006, which will be the largest import of the commodity, due to plans to set up oil refineries.

Senior officials in the food and commerce ministries said in a significant change the country was expected to import 900,000 metric tons of crude palm oil in 2006, which marked a notable shift in import pattern because hitherto it had been importing refined oils and the volume of imported crude oils had been negligible.

"Several new vegetable oil refineries are coming up in the country and some of them will begin operations within a year resulting in more imports of crude palm oil instead of refined palm oil," said a senior official in the ministry of food, agriculture and livestock.

“During the current year, the estimated total vegetable oils' refining capacity would be 3,000 tonnes a day, spread among four or five refineries."

He said the development would lead to significant decline in refined edible oil imports and the price of crude palm oil was cheaper by $35 a ton compared with import of refined palm oils.

"It will be more viable and productive to import crude palm oil and refine it in the country instead of directly importing refined oils," said the official at the federal ministry of food, agriculture and livestock.

The country has an annual vegetable oils’ consumption of around 2.5 million ton, out of which 1.5 million tons are imported. Imports so far comprised around 1.3 million ton refined, bleached and refined palmolein, 150,000 tons refined palm oil and 50,000 tons soy oil.

The authorities believe the setting up of refining units in the country would not only provide business opportunities to domestic companies and generates employment for the local populace, it would also help reducing import bill to some extent.

“The refined edible shares a big chunk in total annual imports every year,” said a commerce ministry official citing recent trade data. “Import taxes are the same for both oils, but soy oil is costlier in the world market and this has proved a dampener for its imports by Pakistan."

He said initially more than 80 percent of the annual edible oil imports used to be from Malaysia, but now Indonesia had a significant 40 percent share in the country’s total palm oil imports.

Traders see the imports of refined edible declining in the days to come as some four edible oil refineries under joint ventures of local and foreign investors are likely to start operations later in the year.

"Work on a couple of refineries has already begun," said a senior trader privy to the development. "The first one is being set up at Port Qasim under a joint venture between Pakistan and Singapore for which a deal was signed between the Port Qasim Authority and the investor company."

He said the refinery, with storage facility, was being set up at an estimated cost Rs 624 million and the Singaporean investor company had entered into the agreement with Port Qasim Authority for the setting up of the unit.

"As per agreement 45 percent cost of the project will be shared by the Pakistani investor and 55 percent by Singapore firm Wilmar," he added. "The other projects are also designed for Karachi in the same industrial area and in which one has some foreign stakes."