ISLAMABAD: Domestic refineries with outdated production facilities have pressed the government to shift from its policy of introducing high-efficiency petrol of international standards by allowing them production of dirty fuel for two-wheelers, which will be cheaper and help reduce the import bill.
These refineries have been charging deemed duty for years and have collected billions of rupees from oil consumers for the upgrade of their plants, but they have not spent the money. The previous government had decided to open an escrow account and asked the refineries to keep the deemed duty collection in it, but they did not deposit any amount.
The refineries have been producing low-quality fuel and boost its quality by mixing metal contents, but they, automakers believe, choke the engines of vehicles. The government had set the date of May 1, 2019 for phasing out metal contents in the domestically produced and imported petrol.
However, according to officials, the refineries are not willing to end the use of metal contents in petrol and are now pressing the government to allow them to produce the dirty fuel for motorcycles.
In order to monitor and restrict the use of metal contents, a committee constituted to examine the matter had decided to specify limits of metal contents in the locally produced and imported RON 90, 92, 95 and 97.
The government had notified that these contents would be reduced to 40 milligrams per litre (mg/l) with immediate effect from October 30, 2018. It was also decided to reduce the ceiling to 24 mg/l between October 30, 2018 and April 30, 2019. After May 1, 2019, it was agreed, the use of manganese would be completely phased out in consultation with the stakeholders.
Now, the refineries want to consume the poor-quality fuel in motorcycles. The share of two-wheelers in petrol consumption is estimated at 45%.
The Pakistan Automotive Manufacturers Association (Pama) has approached the government, saying that oil producing companies have been contacted with a proposal to introduce RON 80 to 82 fuel for two-wheelers, which will be made available at lower prices through special sections at petrol pumps.
They backed the proposal with the argument that majority of the refineries having outdated facilities had not been able to efficiently produce higher-grade fuels due to which they had to use an imported additive to increase the level of RON.
Published in The Express Tribune, May 26th, 2019.