Sale of higher-quality petrol starts across country

Sale of higher-quality petrol – grade 92 RON, which offers better engine efficiency and slightly lower carbon footprint – has started in the country and it will replace low-quality petrol — 87 Research Octane Number till November 20, Pakistan Today reliably learnt on Thrusday.

The oil-marketing companies (OMCs) and refineries had reached an agreement with the government for introduction of a high-grade petrol in the country at a higher price.

However, the local refineries have been resisting the “expensive switchover” and have now been promised price compensation.

The two sides confirmed mixing of kerosene oil and jet fuels in the petrol, diesel and other expensive fuels because of price differential.

The Economic Coordination Committee (ECC) of the Cabinet allowed marketing of higher-quality petrol from November with an estimated price increase of Rs2.75 per litre.

This is part of the petroleum ministry’s plan to introduce petrol — premier motor gasoline (PMG) — of three different grades of better-quality imports to replace the existing petrol of 87 research octane number (RON). The higher-grade PMG imports would include 92 RON, 95 RON and 97 RON.

Higher RON is considered an indication of better quality petrol that the petroleum ministry says will provide “reduced environmental impact due to lower emissions as a result of better engine hygiene, while simultaneously providing an enhanced motor vehicle experience to the customer”.

It will accrue benefits on account of supply sustainability, improved customer choice and efficient engine operation. It may be noted that current automobiles are designed at 92 RON or higher grade.

The annual consumer of PMG at present is about five million tonnes, of which about 70 per cent (3.5m tonne) is imported and the remaining 30pc (1.5m tonnes) is met through local refinery production.

Domestic refineries are not capable of producing 92 RON petrol because of their old technologies requiring substantial investments for upgrade. Oil marketing companies (OMCs), refineries and the government have, however, agreed to introduce 92 RON as main grade fuel.

For this to deliver, OMCs have been allowed to import and market minimum 92 RON petrol under the existing regulated regime while import of PMG below 92 RON will be banned. The OMCs will get 87/90 RON petrol from refineries as is the practice now and then commingle imported and locally produce grade to improve the specification to retail level at around 91 RON.

The petroleum ministry has also recommended allowing refineries to also import higher-octane products of 95 and 97 RON through change in import policy order of the commerce ministry.

Pricing formula for imported 92 RON petrol will be based on five-day average Mean of Platts Singapore (MOPS) quotations plus tender and freight premiums/incidental charges on an actual basis. The pricing of this product would be on the basis of Pakistan State Oil’s (PSO) actual landed cost while other OMCs/refineries would also follow it as is the current practice.

The Oil and Gas Regulatory Authority will monitor the selling price of 92 and 95 RON petrol, as being down for the current 87 RON petrol. The ministry said local refineries would now produce 90 RON shortly, except for Attock Refinery which would be allowed to continue producing the current 87 RON petrol till a solution was found that reduces or eliminates their surplus naphtha production.