The circus

Business Recorder argues that shifting the petroleum levy burden to refineries could weaken the economics of an industry the government has encouraged to upgrade. The commentary says petrol margins are already negative and the proposed changes could leave about two-thirds of refinery output operating at a loss when furnace oil is included.

The piece contrasts refineries’ average return on equity of around 4 percent over the past decade with 26 percent for fertilizer companies, 18 percent for E&P firms, 16 percent for banks and 14 percent for cement companies. It warns that changing the economics after refinery agreements have been signed could undermine confidence in policy stability and deter investment in upgrades. The article argues that any higher petroleum levy should be collected transparently rather than shifting the cost onto refinery margins.