- Minor price difference between HOBC and Super Unleaded petrol causing shortage of HOBC in major cities
- Shell Pakistan official says PARCO unable to meet HOBC demand because of production limitations
The demand for High Octane Blending Component (HOBC) has gone up in big cities because of the relatively minor difference in price compared with ordinary petrol (Super), resulting in a shortage of the fuel which is being widely used in imported vehicles and even in some locally manufactured cars with better engine technologies.
HOBC fuel is mostly used to boost performance and to give better millage, particularly in imported vehicles, but the little price difference between Super petrol and HOBC has suddenly enhanced its demand in big cities like Lahore, Karachi, Islamabad and other cities this month and most of the petrol pumps, especially Shell Pakistan, often run out of Hi-Octane fuel.
A survey has revealed that there is a shortage of HOBC throughout the country as only one oil refinery, PARCO, is producing this high quality fuel, but its supply is limited to 3,500 metric tonnes only, while its demand stood at 4,092 MTs in September this year. In November, the demand could go up to 4,500 MTs.
In Karachi, the HOBC is only available in posh areas, including Defence, Clifton and Shahrah-e-Faisal Road.
In view of the demand and the profit potential, the sources said the Oil Marketing Companies (OMCs) have shown willingness to import the product to meet demand, however, the Ministry of Petroleum has directed the OMCs to write a letter to the Oil and Gas Regulatory Authority (OGRA) for allowing HOBC import and the product pricing mechanism for the same.
Till date, however, neither the Ministry of Petroleum nor OGRA have responded to the OMCs queries with the result that HOBC shortage has intensified, official sources said.
“This fuel is being produced by PARCO only and it can produce only a limited amount,” an official of Shell Pakistan informed Pakistan Today. She said that there was no shortage of Hi-Octane fuel in Lahore.
“There is production constraint around HOBC as the refinery has limited output. What has changed is the overall price reduction which has increased demand for HOBC. Hence, this is not a current shortage but an overall demand-supply imbalance,” she said. “Price differential varies and at the moment the difference between price of Super petrol and HOBC is about Rs 3. In November this year, the retail price of HOBC is Rs 79.79/l, while Super petrol is being sold at Rs 76.26/l,” she continued.
The Shell Company sold only 1,200 MTs of HOBC in September this year while PSO sold 2,145 MTs HOBC throughout the country during the same period.
Official sources in PSO have said that sales of HOBC have increased by almost 250 per cent since last year chiefly due to the declining HOBC prices. However, supply of the product has not remained at par with the market demand as PARCO does not have the production capacity to meet the total market demand. This means that the additional product would have to be imported to meet the needs of the market.
All Pakistan Motor Dealers Association Chairman HM Shahzad said that in standard vehicles, ‘knocking’ is rarely an issue because the compression ratio – the pressure that air-fuel mixture is put under in the cylinder – is low enough that the regular octane fuel is sufficient. There is no benefit of running premium like Hi-Octane fuel in a standard motor, since it will never be able to take advantage of that gasoline’s higher knock resistance. However, more aggressive engine management schemes, especially those found in turbocharged or supercharged vehicles, can turn up the compression to a high level, requiring much higher octane gasoline to avoid knocking.
