After petrol, govt plans to introduce higher grade of diesel

Published: July 19, 2017
SHARES
Email
PHOTO: AFP

PHOTO: AFP

ISLAMABAD: The government has decided to introduce better quality of High Speed Diesel (HSD) under the deregulated regime of oil marketing companies (OMCs) and dealer margins, which will improve efficiency of vehicles’ engines.

At present, low quality HSD is being used in Pakistan, whereas other countries have moved on to Euro3, 4, and 5.

Earlier, the government introduced Research Octane Number (RON) 92 for petrol, replacing the earlier RON 87.

RON87 had been abandoned by a majority of the countries and is currently only being used by Somalia.

Oil, gas: Exploration and production sector has seen $10b investment, says Abbasi

Now, the Pakistan government has also planned to introduce higher grades of diesel in the country.

Sources said that the government was in process of introducing alternative grades of HSD – Euro 3, 4 and 5 under the deregulated regime. They said that the Ministry of Petroleum had drafted a summary to be tabled before the Economic Coordination Committee (ECC) for approval. The ministry had moved a summary to different concerned ministries, and the regulator – Oil and Gas Regulatory Authority (Ogra) – to seek comments before moving to the economic decision-making body for approval.

Officials said that the petroleum ministry wanted to introduce regime of deregulating margins of OMCs and dealers before introducing alternative grade of high speed diesel.

At present, Ogra says that reasonableness of the margins is being determined by the federal government. It argued that leaving the determination of margins on oil companies will lead to the top six firms – with a market share of 87.9% – creating a cartel due to lack of competition and alternative choice of fuel.

Petroleum product prices likely to fall

Similarly, the regulator said that retail dealers’ associations would create a monopoly situation and consumers will be at their mercy.

The petroleum ministry is of the view that under a regulated regime, margins are fixed, therefore good or bad performers are equally benefitted. On the other hand, under a deregulated environment, the OMCs have to capture the market by offering a reasonable price and efficient quality. So, a good performer would definitely be in a winning position.

Consequently, market forces may discourage sale at higher price, restrict cartelisation and OMCs and dealers would have to improve position before the general consumers.

Regarding the alternative of HSD, the petroleum ministry said that the government is already in the process of introducing alternative grades under the deregulated regime for which a draft summary for ECC has already been circulated to concerned ministries and stakeholders for comments. It further said that prices would be determined under market competition whereby bulk buyers may adversely influence market cartelisation.

Published in The Express Tribune, July 19th, 2017.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.

Facebook Conversations

Reader Comments (2)

  • concernedcitizen
    Jul 19, 2017 - 10:57AM

    About time we do something about the quality of petrol.
    An independent body has to be made responsible to check the quality of petrol ( i.e. check that companies are maintaining minimum RON of 92) and prevent price collusion among companies. Recommend

  • Imran Ahmed
    Jul 19, 2017 - 2:11PM

    Am I wrong to think that Attock and Total Parco already sell low Sulphur Diesel?Recommend

Leave Your Reply Below

Your comments may appear in The Express Tribune paper. For this reason we encourage you to provide your city. The Express Tribune does not bear any responsibility for user comments.

Comments are moderated and generally will be posted if they are on-topic and not abusive. For more information, please see our Comments FAQ.

More in Business