Local oil refineries have expressed reservations on the pricing formula for Euro-5 standard fuel and said that they were not consulted regarding the determination of its price and value.
In a letter written to the Petroleum Division, Pak-Arab Refinery Company Limited (PARCO), Byco, National Refinery Limited (NRL), Pakistan Refinery Limited (PRL) and Attock Refinery demanded a meeting with the government and said that consultation should be held on the pricing system of Euro-5 standard fuel before its adoption. The letter written by the refineries said:
“There are serious flaws in the guidelines regarding Euro-5 fuel.”
Oil refineries have earlier complained that the government did not give them ample time to switch from the lower grade Euro-2 fuel to Euro-5 standard. The sector has asked the government to adopt a phased approach by first introducing Euro-4 specification as others countries did allowing development of robust and reliable supply chain, preventing price shock to consumer, better analysis of incremental environmental benefits, adjustment of prevailing vehicle population to the new specification and allowing local refineries to upgrade through capital investments. According to reports, oil refineries will have to upgrade their plants in order to supply the newer & cleaner Euro-5 fuel.
Earlier in June, the government announced to upgrade fuel used in Pakistan to a more environment-friendly Euro-5 standard in a bid to counter air pollution, despite resistance from oil refineries. It had also directed Oil Marketing Companies (OMCs) to import Euro-5 standard fuel. Euro-5 petrol will be imported from 1st September while Euro-5 diesel will be imported from 1st January 2021.
In August, the state-owned Pakistan State Oil (PSO) launched Hi-Octane 97 Euro-5 fuel at a ceremony held at PSO Service Station-2, Diplomatic Enclave in Islamabad becoming the first company in Pakistan to begin selling Euro-5 fuel. Currently, out of the 3,500 pumps owned by PSO across the country, 56 are already supplying Euro-5 standard fuel which is offered at approximately Rs 20 higher than regular fuel.
The Euro-5 fuel not only produces lower emissions but also improves engine performance. However, if the government is able to implement its plan regarding the upgradation of fuel, refineries will still need 3 years to upgrade their production units.