Euro-III and Euro-IV High Speed Diesel (HSD) will not be making its way to fuel stations in Pakistan. Oil Marketing Companies (OMCs) have rejected the government’s proposal to introduce the aforementioned diesel grades, arguing that it’s not feasible to sell them in the Pakistani market.
Ministry of Petroleum and Natural Resources wrote to the OMCs in order to bring Euro-III and Euro-IV standard HSD to the local market. The Ministry suggested initially importing the fuel through a deregulated environment. The local refineries would then be upgraded to match the fuel’s import quality standards.
Oil Companies Advisory Council (OCAC) was asked by the Ministry for a method and timeframe for importing HSD followed by a timeline for local production of the fuel.
OCAC did not go through with the request to import high quality fuel. It said that the cost-benefit analysis carried out by them does not support the move.
The Council argued that in Europe the transition from Euro-I to Euro-V took 16 years. They designed engines first, which complied with Euro-II, Euro-III, Euro-IV and Euro-V emissions and then officiated the fuel specifications for these standards. This gave the refineries enough time to upgrade.
They stated that the situation in Pakistan was different. Euro-II was launched in Pakistan on Jan 1, 2017 with all imports shifting from 0.5% sulfur (5,000 particles per million) to 0.05% sulfur (500 particles per million). Imported diesel accounts for around 50% of the total demand. The better standards (Euro-III, IV and V) have subsequently lesser impurities and are more efficient and environmentally friendly.
Wouldn’t Help The Customers
OCAC said that upgrading from Euro-II to III, IV and V “would only have a potential positive environmental impact and no direct benefit will come to the consumer in terms of efficiency or price.”
The Council added that most of the vehicles in Pakistan are old/in poor condition which won’t improve emissions from these vehicles with better quality fuel. Another downside to this is that consumers would not be attracted by the better HSD standards. It should be noted that most of the HSD is used by the transport, trucking and farm sectors.
With no benefits to the consumer, there is no point in introducing the more expensive HSD fuel, they said.