Govt offers seized hydrocarbon solvent to refineries at discounted rate

KARACHI: The government has offered refineries the opportunity to process confiscated light aliphatic hydrocarbon solvent (LAHS), smuggled from Iran, at a discounted price.

Last year, customs authorities in Balochistan seized around 400-450 tank lorries (TLs) carrying the smuggled product. Preliminary assessments suggest the confiscated solvent falls within the distillation range of light and heavy naphtha, with some kerosene content. A meeting was recently held in the Petroleum Division to determine how to dispose of the seized LAHS.

According to official documents, testing each TL could be costly, and these expenses would need to be factored into the final price of the product. If testing confirms that a TL’s entire content meets light naphtha specifications (62-70 RON), the applicable price would be the monthly average FOB price of naphtha, discounted by approximately 15 per cent. This discount includes freight, handling, processing charges at the refinery, and a fine to the importer, applicable for the month in which the product is decanted at the refinery.

For TLs containing heavy naphtha (42-48 RON), the discount would be set at 20 per cent under the same pricing mechanism. In the case of TLs complying with kerosene specifications, the price would be based on the fortnightly OGRA-announced rate, with a 15 per cent discount. If a TL contains a mixture of light or heavy naphtha and kerosene, the price would be determined using a weighted average.

The managing director of Pakistan Refinery Limited (PRL) informed the meeting that while refineries could process the naphtha and kerosene components, each TL would need to undergo laboratory testing at a refinery. This is necessary to ensure that the product does not contain metallic or chemical impurities that could damage refinery equipment such as catalysts and heat exchangers.

At a follow-up meeting, the collector of customs, Quetta said that test reports were available and would be shared with the Petroleum Division and refineries for preliminary review. To further assess the product’s quality, customs will send random samples from 10-20 TLs to a refinery for detailed laboratory testing to confirm the absence of harmful contaminants.

If refineries agree to process the product based on the preliminary reports and random testing, the remaining TLs available for disposal will be allocated to refineries willing to accept them. However, each TL would still need to be individually tested to determine its suitability for processing. If a TL is rejected after detailed testing, it will be returned to customs for further action, the documents stated.