By Raza Khan ISLAMABAD, Nov 08 (INP-WealthPK) Pakistan’s oil import bill consumes a big chunk of its hard-earned foreign exchange annually, triggering trade deficit and exposing the government to uneasiness on the external side. To reduce its dependency on the imported refined petroleum products, the country needs massive investment in the establishment of new refineries and enhancement in the capacity of already operational refineries to increase domestic production. Demand for petrol, diesel and other petroleum products in the country has increased, as economic activities are gathering momentum after being affected by the COVID-19 in 2020. Currently, Pakistan has five oil refineries having the capacity to refine 0.42 million barrels of crude oil a day, while daily oil consumption has soared from 0.55 million barrels to 0.60 million barrels a day. These five major oil refineries are Attock Refinery Limited (ARL), National Refinery Limited (NRL), Pak Arab Refinery (Parco), Byco Petroleum and Pakistan Refinery Limited (PRL). Statistics show that Pakistan also imports refined petroleum products and crude oil increasing the import bill. Domestic oil production only meets 16% of the demand, while 84% of the demand is met through imports. The country can save a huge amount of capital by importing crude oil and refining it rather than importing expensive refined petroleum products. According to the Pakistan Bureau of Statistics, Pakistan imported 1.212 million metric tons of petroleum products in September costing US$80.13 per barrel approximately, while the import of 0.76 million metric tons of crude oil cost US$71.59 per barrel. The establishment of new and upgradation of the existing oil refineries would certainly reduce import of refined petroleum products gradually that would help save over US$6 per barrel on import. Replacing low-grade petrol and diesel with the advanced Euro-5 and Euro-6 would also increase the fuel efficiency of vehicles. Experts say Pakistan needs US$10 billion to US$15 billion for establishing new oil refineries and upgrading the present ones. In August, Pakistan spent US$1.76 billion to import crude oil and refined oil products indicating that the country is a potential market for oil companies to invest in oil refineries. Car sales are also on the rise in Pakistan and auto-manufacturers are struggling to meet the demand. With this trend, the oil sector will be flourishing in Pakistan for years to come. The government hopes that international oil companies would take interest in establishing oil refineries in the country. During the visit of Saudi Crown Prince Muhammad Bin Salman (MBS) to Pakistan in 2019, it was announced that the Saudi Oil Company Aramco will establish a refinery and a petrochemical plant in Pakistan with an investment of $10 billion. However, this plan is yet to be materialised. The government will soon announce Oil Refining Policy with a special focus on the establishment of new oil refineries in the country besides the upgradation of the existing ones. It is pertinent to mention that Pakistan’s trade deficit during the Fiscal Year 2020-2021 swelled to US$31 billion as compared to US$23.159 billion in 2019-20. Imports during last the fiscal year were recorded at US$25 billion, while imports were US$56 billion and import bills of oil contributed almost one-fourth of total imports, a major portion of trade deficit.