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June 24, 2018

Shell says sales slipped after major supply chain safety overhaul

Business

June 24, 2018

SHEIKHUPURA: Jawwad Cheema, managing director Shell Pakistan Limited, on Saturday said the company’s sales had substantially dropped following the removal of all the sub-safety-standard trucks from the supply chain in a bid to avoid tragic incidents like the one in Ahmed Pur Shariqa, South Punjab.

On June 25, 2017 and explosion took place after an oil tanker went off road to avoid a collision near the eastern city of Bahawalpur. A large crowd of people gathered around the truck and many began collecting fuel in containers when the tanker exploded in a huge fireball. As a result over 200 people were killed. Following the incident, Shell had agreed to pay a fine of about Rs257 million in compensation on the orders of the regulator.

“The decision was tough but no business is above the safety of human life and as a result Shell’s market share fell to 11 percent from 18 percent,” Cheema said speaking at a ceremony here.

The event was held to induct a total of 120 new compliant oil tankers into its dedicated haulier fleet at Shell Terminal in Machike.

Cheema said since then the company had been working to improve the safety standard of the tanker-lorries carrying petroleum products and apart from this addition another one hundred trucks would be added to the fleet by December 2018.

“The cost of one oil tanker is almost Rs25 million, thus the company has made another major investment in Pakistan,” he asserted.

He said by investing in the addition of these tankers, the total number of Shell dedicated haulier fleet had now increased to 630, which placed the company in a leadership position with regards to compliant fleet in the Industry.

“Being the oldest multinational in the country, we have always been at the forefront in introducing international products, offering and standards to the Pakistani market,” said Cheema.

Talking about another project, he said new pipelines were need of the hour not only to meet the growing demand but also for improving the safety standards in oil supply chain.

“The white oil pipeline project will cost between $120 to $150 million, while it will be completed by June 2019,” the Shell chief said adding this pipeline had a throughput capacity of 12 million tons of oil annually from the port city of Karachi to Machike in Sheikhupura.

Replying to a question, Cheema said the government was evolving a policy for an oil city in Gwadar and once it’s announced, the private sector would go there to invest.

Habib Haider, Manager External Affairs SPL, said the company was the first to introduced Australian Design Rules (ADR) standards for vehicle safety in Pakistan in 1998, setting industry standards in transportation and handling of oil products, with its global safety requirements being shared and adopted across Pakistan’s supply chain.

“Last year, Shell engineers worked with an OEM in China to develop enhanced tank lorry designs that comply with required national, international, and OGRA-specified (Oil and Gas Regulatory Authority) fleet standards,” Habib said.

He was of the view that pressure on foreign exchange and balance of payments would further mount in future with an increase in international price of crude oil whereas availability of indigenous fuel is the only solution for it.

“For this, the government should facilitate the exploration of Shale oil and gas as Pakistan has huge reservoirs of it,” the SPL official said.

The event was attended by Director General Oil, Member Oil, senior functionaries from OGRA, Rescue 1122, and National Highways and Motorway Police (NHMP).

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