Govt picks UK firm for fuel marking to check adulteration

Oil barons make extra money as cheap kerosene oil is mixed with diesel

Zafar Bhutta October 05, 2017
A worker stands under a derrick at a oil processing facility. PHOTO: REUTERS

ISLAMABAD: The government has decided to launch a fuel marking programme in an effort to curb the mixing of cheap kerosene oil with high-speed diesel, said a senior government official.

At present, Pakistan refineries are producing kerosene oil without adding any dye, which makes it difficult to detect its mixing with high-speed diesel. Under the fuel marking programme, a chemical will be added to kerosene oil to help identify and check adulteration.

“The price difference between kerosene oil and high-speed diesel is Rs33.40 per litre, that’s why oil barons are minting money by mixing kerosene oil with high-speed diesel,” the government official told The Express Tribune.

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He revealed that a technical committee, headed by the Oil Companies Advisory Council (OCAC) and comprising representatives of the Oil and Gas Regulatory Authority (Ogra), refineries and the Hydrocarbon Development Institute of Pakistan (HDIP), had been constituted to implement the fuel marking programme.

The committee has completed the bidding process and Authentix of the UK has been declared successful bidder. The cost of fuel marking has been quoted up to Rs1.22 per litre of oil for six months on a trial basis.

The fuel marking programme will be run in phases. Initially, kerosene oil will be targeted and later other fuels such as high-speed diesel, light diesel oil and petrol will be covered under the programme.

The official pointed out that annual production of superior kerosene oil at domestic refineries stood at around 140,000 to 150,000 tons for consumption inside the country.

The mixing of petroleum products has not only caused shortage of kerosene oil in the domestic market, but it has also hit government revenues on high-speed diesel sales.

He said specifications of kerosene oil had also been revised in line with the latest fuel quality standards following consultation with the oil industry in order to discourage adulteration in petroleum products. Oil and gas industry regulator Ogra will not participate in commercial phase of the fuel marking programme, but it has agreed to perform its role at the implementation and monitoring stages.

According to a proposed mechanism, the actual cost of fuel marking may be included in the ex-depot sale price of kerosene oil through the monthly price revision.

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The successful bidder has also agreed to offer a 3% price reduction for expanding the programme’s duration beyond the six-month trial period to one year.

Initially, the programme will be implemented for one year and then depending on results, it will be extended with the consent of Ogra or a fresh tender may be invited.

For the deregulated petroleum products, oil marketing companies may be directed to introduce and finance fuel marking from their profit margins.

Published in The Express Tribune, October 5th, 2017.

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