Refineries to upgrade Euro-V specs in 5 years

KARACHI: Government and refineries agreed to upgrade on Euro-V specifications in the next 5 years, along with a deal to relegate government’s role to only a tax collecting authority instead of a regulator, The News has learnt.

The Ministry of Energy met with the local refineries in this regard on Wednesday in Islamabad, where State Energy Minister Dr Musadik Malik as well as former prime minister Shahid Khaqan Abbasi, secretary energy and other officials discussed refining policy 2022.

Top executives of five local refineries – Pak-Arab Refinery, Pakistan Refinery, National Refinery, Attock Refinery and Cnergyico Pk were invited for the policy meeting.

According to sources privy to the meeting, the government and refineries agreed to deregulate the sector on commercial terms.

Sources said that apart from deregulation, refineries also committed upgrading on Euro-V specifications in next five years. Refineries would give a guarantee to the government in this regard.

Sources pointed out that certain performance indictors would be set in, and the Oil and Gas Regulatory Authority (OGRA) would be monitoring the situation to see the implementations of the measures under this guarantee.

“Under the deregulation of the sector, government would only be an authority collecting petroleum levy, sales tax and custom duty, and would not have any role in price fixation,” sources shared.

Deregulation of the sector would push the refineries and oil marketing companies (OMCs) in the competition to attract buyers by selling petroleum products at competitive rates, they added.

Working on the refining policy was initiated in the previous government of Pakistan Tehreek-e-Insaf (PTI) and a draft policy was finalized; however, it could not be approved after differences grew over it between the government and refineries.

The policy was not taken up by the new government after coming to power at the start of April this year, until the government convened the meeting on Wednesday to consider the refining policy.

Stakeholders from the oil sector said the current days were high time that local refineries started executing the “deep conversion project”, which would increase capacity utilisation after converting furnace oil (FO) into high margin fuels like petrol (MS) and high speed diesel (HSD), which were currently being imported for domestic consumption.

After the project, refineries would be able to produce additional 25-30 million barrels of oil products per annum, which according to estimates would save foreign exchange reserves of around $0.4 billion in the long run.