The transition to Euro-V fuel standards has begun. According to a notification issued by the Ministry of Energy – Petroleum Division, all petrol imports from September 1, 2020 would have to be in accordance with Euro-V specifications. In the next few months, diesel imports too are planned to be switched over to this standard.
The federal cabinet’s decision to move to higher grade fuels is motivated by environmental concerns. It is indeed government’s responsibility to enforce stringent vehicle emission and fuel standards to clean the pollutant filled air that also brings with it serious health issues. To that extent the move is welcome.
However, attainment of that goal is dependent on number of other factors like having Euro-V compliant engines, tighter vehicle maintenance and tune-up regime, and enforcement of the emission standards. Moreover, for ensuring that vehicles in Pakistan actually start getting Euro-V standard fuels, a major upgrade of Downstream Industry, especially the refineries that provide for 30% of domestic petrol and 50% of the diesel requirements, is required. The storages and even the retail outlets may also need to be updated.
It further needs to be emphasized that Hydrocarbon Development Institute of Pakistan (HDIP) too will have to develop its product testing capacity, which till lately was seriously lacking even with regards to lesser quality fuels. It needs to be recalled that the government allocated Rs55.5 million in the current fiscal year for up-gradation of HDIP testing capacity, which means its capacity may take some time to come up to the mark. In such a situation, it is feared that consumers can end up paying the price premium for Euro-V fuel while getting lesser grade fuel.
The objective of this report, which primarily focuses on the supply chain shortcomings in the country for a big jump from Euro-II to Euro-V standard, is to initiate a much needed public debate about the government’s move, which carries a certain air of abruptness. The report at the same time advocates a gradual transition to allow time for related requirements to be met. It is a very important policy decision that has to be synced up with ground realities. Therefore, IPI believes that until an enabling environment is created for this transition to higher grade fuel, the goal of environmental improvement would not be met, but the ordinary consumers may end up paying for this hurriedly pushed decision.
The report importantly underscores the question if we were already unnecessarily making motorcyclists buy higher grade fuel than what their engines actually required. Using a fuel with a much higher octane rating than engine specifications with regards to compression ratio is unnecessary and of no operational benefit.
It is hoped that the government would review its deadline for the introduction of Euro-V in the country and come up with a realistic roadmap so that the stakeholders get sufficient lead time to make the necessary arrangements for a meaningful transition. Read More…
