The state-run oil marketing giant Pakistan State Oil (PSO) is all set to begin importing Euro-5 standard fuel after approval from the government. Reportedly PSO will make partial imports from Kuwait Petroleum Corporation, which has been supplying fuel to Pakistan over the past 40 years. Pakistan has been using a 60-day interest-free credit facility from Kuwait since year 2000.
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According to information, Pakistan meets 60% of its high-speed diesel requirement through production by domestic refineries and imports around 40% of the demand annually. PSO’s share in high-speed diesel import is around 55% that meets 22% of the country’s total consumption, which is primarily sourced from Kuwait Petroleum through a government-to-government contract spanning more than 40 years.
Pakistan meets 30% of its annual petrol requirement through domestic refineries and imports around 70% of the need. According to sources PSO’s contract with Kuwait Petroleum would be valid till December 2020 for supply of Euro-II diesel. PSO is bound to take delivery of 2-2.3 million tons from the Kuwaiti company this year.
Sources said the Petroleum Division had sought approval of the Cabinet Committee on Energy, for import of Euro-V fuel from the first week of June. Subsequently, all imports will conform to the Euro-V specifications with effect from the third quarter of calendar year 2020. Import of petrol below Euro-V specifications may not be allowed to any oil marketing company (OMC) beyond the deadline, according to the Petroleum Division.
All imports of diesel may conform to Euro-V specifications with effect from January 2021 set by Kuwait Petroleum. Import of diesel below Euro-V standard may not be allowed to any OMC beyond that deadline, the Petroleum Division said, adding that PSO, however, may start importing Euro-V diesel from the first week of June 2020, as and when available from Kuwait Petroleum, which indicated that it would start trial production very soon.
The Petroleum Division proposed that the current marketing mechanism for diesel and petrol with regard to pricing and inland freight equalization margin should prevail and the Oil Companies Advisory Council (OCAC) and the Oil and Gas Regulatory Authority (OGRA) would take further action accordingly.
OGRA would finalize price calculation in consultation with oil refineries and PSO so that any undue advantage to the refineries producing fuel below Euro-V standard could be avoided, the Petroleum Division added. It said mixing of imported and locally produced grade by the refineries and OMCs may also be allowed as it would improve overall specification & compliance of the product.
Full Story: Tribune