Attock Refinery shuts main unit as Iranian smuggled diesel floods market

KARACHI: Attock Refinery Limited has shut down its main crude distillation unit due to high stocks of diesel, which have not been lifted because of rampant smuggling of Iranian fuel oil in the domestic market, industry officials said on Monday.

"We have shut down our main crude distillation unit, which has a capacity of 34000 barrels per day," Adil Khattak, Chief Executive Officer (CEO) of Attock Refinery Limited, told The News."The main unit has been closed due to high stocks of diesel as it has not been lifted due to low consumption in the domestic market."

Industry officials said the demand for diesel is being met through Iranian diesel in the country, which is being smuggled in huge quantity, which has been resulting in its low lifting from the local refineries.

Khattak said that Attock Refinery is operating at 33 percent capacity after the accumulation of a huge stock of diesel and now the main unit has been shut down. According to the oil sector, the average sale of high-speed diesel per day stood at 13,729 tonnes in the first fifteen days against a target of 22,980 tonnes - down 40 percent.

Historically, HSD sales during April and May are high due to the harvesting season.Industry sources say that the deficit is being fulfilled by the smuggled product coming in from Iran, which is hurting the local refineries and also causing a revenue loss running into billions of rupees to the tax authorities.

Khattak, who is also the chairman of the Oil Companies Advisory Council (OCAC), said that the oil sector has been raising the issue of oil products smuggling from Iran for quite some time, "but no corrective steps have been taken to stop its smuggling".

He said that Iranian diesel is not being supplied throughout the country, which was restricted to Balochistan and Karachi."The refineries are facing the brunt of smuggled diesel and this has been casting doubts over upgradation agreements under the Brownfield Refinery Policy," Khattak added. 'How can we put in more than five billion dollars investment in the upgradation when refineries are running into troubles because of smuggled diesel."

Khattak noted that Iranian diesel has been spoiling the hard work, which was done in the last four years for upgradation policy."The oil sector even informed the Special Investment Facilitation Council (SIFC) about the unchecked smuggling of Iranian diesel, however, this problem is still unresolved."