The association between the administration and the oil industry continues to sour with the administration’s recent decision for all Oil Advertising Companies to import EURO 5 fuel met with struggle from the industry.
The two parties were already in difference
over the pricing mechanisms and upkeep of 20 day stocks, which resulted in disastrous
troubles in the supply routine.
EURO-5 fuel, citing details such as $ 200 million worth of yearly foreign exchange loss, incapacity to make a change of such scale on such short notice, and the fact that the fuel prices would shootup for the consumers by Rs. 7-8 per liter.
The case was also made in the courtesy
of the automakers, stating that they won’t be able to imitate to such a major
shift of obedience rating either. Given that the current fleet of cars run on
EURO 2 oil, a unexpected shift to EURO 5 wouldn’t suit the car engines.
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On 8th of July 2020, the Directorate General of Oil of the Petroleum Division instructed the Oil & Gas Regulatory Authority (OGRA), Hydrocarbon Development Institute of Pakistan (HDIP) and oil industry to mandate the specification of all three grades (RON 92, 95 & 97) of EURO 5 petrol.
Apparently, in response to these directions
Oil Companies Advisory Council (OCAC) issued a letter addressed to Petroleum
Division, quarreling that managing supply of main grade (RON 92) fuel with
EURO-II and EURO V compliance would be unfeasible for the OMCs even in main marketplaces.
The cost consequences of this shift are too terrible, with little ecological
benefits, since the government’s goals can only be met if local delivery and
supply also conform to EURO 5.
The letter insists that a step by
step tactic, as discussed in prior meetings, should be taken to bring about
natural progress, as before observed in other countries. At this stage EURO 4
compliance should be sought by the government, allowing OMCs to create a supply
chain that would cater to the approaching changes, allowing automakers to familiarize
to the new type of fuel and for the on-road automobiles to adjust to the shift
and for the clients to not be taken by astonishment by the unexpected price
hike.
