OMCs to start importing high-octane petrol from Nov 1Archive
KARACHI: The country is set to start importing higher-quality petrol from the next month, though abandoning the lower-grade fuel would take time.
Moreover, consumers are estimated to pay Rs2.75 more on a litre of higher-grade petrol.
Oil marketing companies (OMCs) say they are targeting all import shipments of high-octane petrol planned from Nov 1 as per government’s directive.
The government is replacing imports of research octane number (RON) 87 petrol with those of 92 RON, commonly known as Euro-II gasoline.
Higher RON is considered an indication of better quality petrol and is believed to reduce environmental impact due to lower emissions and enhance engine efficiency for a better motor vehicle experience to the user.
However, mixing of local refinery product and imported 92 RON fuel would be required for a certain period as local refineries can only gradually increase their RON from 87, depending on their configuration and capability, M. Ilyas Fazil, CEO of the Oil Companies Advisory Council (OCAC), said.
Besides, the price of higher-quality petrol will depend on the international market and “quoting any figure at this time would be premature,” he said.
CEO of Shell Pakistan Ltd Jawwad Cheema said imports of 92 RON petrol will get under way from the import/tender cycle of the Pakistan State Oil. He said most countries have already switched to 92 RON as the main-grade petrol.
On possible price hike of petrol by switching over to 92 RON, he said, “Better-quality fuel leads to efficiency and that is an advantage for the end consumer. Therefore, it’s not really a matter of price increase, but quality fuel.”
The pricing formula for imported 92 RON petrol will be based on five-day average Mean of Platts Singapore (MOPS) quotations plus tender and freight premiums/incidental charges on an actual basis.
“As an international player, we see an opportunity as the fuel market deregulates, and we are excited to add value-added products to our existing portfolio,” Mr Cheema said.
When asked about the future of high-octane blending component (HOBC) fuel, which is 95 RON at present in Pakistan, he said the government has taken two decisions on fuels. “One relates to changing main grade offering from 87 RON to a higher one; the change continues under a regulated regime for main grade, as it is now. The second decision is about allowing import of higher RON value fuels under a deregulated regime.”
He said the ability to improve higher-grade product, ie 95 and 97 RON fuel, would allow OMCs to choose a strategy they wish to pursue in their offer for higher-quality fuels.
A well-planned deregulation in Pakistan’s downstream oil and gas sectors would lead to win-win situation for all — the government, industry players and consumers, he said. “This is well demonstrated in several other developing Asian economies, for example Malaysia, the Philippines and Thailand.”
He said high-octane fuel would help improve overall emission standards, especially as engines with Euro-II and lower calibration were compatible with better-quality fuels.
Moreover, 70 per cent of refined motor gasoline in Pakistan was imported, he said. “We expect it to remain as such until refineries are upgraded to be able to meet local demand.”
Published in Dawn, October 2nd, 2016