International Customs Day: Byco is Bullish on Pakistan’s Petroleum Industry Outlook

TEXT: Byco is bullish on the future of Pakistan’s oil industry. Back in 2018 the OCAC projected demand for petroleum products to rise by 10% per annum for the following half decade. Despite the drop in demand temporarily due to Covid, this prediction has borne true. Demand will continue to increase. And you have a situation where currently domestic refiners cannot meet existing demand. Therefore more investment is required for supply to catch up with the demand. Furnace demand is already hitting rock bottom, but diesel and petrol demand will continue to increase in Pakistan for the medium to long term since our demographics dictate this growth in demand.

Byco is investing heavily Mash’Allah by installing our Upgrade – 1 Project. This includes a Fluidized Catalytic Cracking Unit (FCC) and Diesel Hydro Desulphurizing Unit (DHDS). The FCC will convert our excess furnace oil whose market demand has dried up, to more profitable high quality gasoline and diesel. This will make our products more competitive and improve Byco’s efficiency. The DHDS will remove the Sulphur from our diesel. Together this upgrade will make Byco Pakistan’s first refinery which will be in compliance of the Government of Pakistan’s requirement of producing Euro – 5 and even Euro – 6 compliant products.

Byco has developed a reputation of being Pakistan’s Greenest Oil Company. We recently signed an MoU with the United Nations Development Program to help address the UN’s Sustainable Development Goal #6 to conserve “Clean Water & Sanitation”. What we have done as per the MoU is to use a patented technology that was shared with us by the UNDP for water recycling. To begin with we have installed a water recycling plant at our first outlet in Quetta (a water stressed area) where the water being used for car washes will be recycled. Not only will this be great for the environment, but it will save money for the business as well. We hope to expand this program throughout our network where we have car washes.

But the main strategic intervention that Byco has done in Sustainability has to do with our Carbon emissions. Byco is conscious of Climate Change. Therefore we have made a commitment that we will go Carbon Neutral by the year 2030. We intend to do this mainly by sequestering our Carbon emissions through tree plantation. We are adopting the Miyawaki Method of tree plantation to plant the exact number of trees that would offset our emissions. This Method helps to grow a natural forest 10 times faster, with 30 times the biodiversity and 30 times the carbon sequestration than typical plantation methods would. We have already done several prototypes and are about to launch the first Urban Forest using this method outside our refineries in Balochistan.

Responding to Covid-19 pandemic, Byco was forced to go into cold circulation in the 4th quarter of FY2020 due to the precipitous drop in demand that occurred with the Government put the lockdown into place. Alhamdulillah this only lasted a little more than a week and we were back up and running soon. But it was a difficult year for everyone, not least for our industry and our company. Mash’Allah we did not retrench any of our workforce, and God has been Great in helping us to be resilient throughout the year of 2020. We immediately began distributing rations to the communities that lived near our refinery which were hardest hit economically due to the lockdowns. We put into place SOPs at all of our more than 400 retail outlets and all our offices and installation to deal with the spread of Covid-19. Insha’ Allah we see light at the end of the tunnel with the expectation of the vaccine to be distributed in Pakistan in the coming weeks and months.

Byco congratulates the Government in upgrading Pakistan’s fuel standards; Advent of Euro-5 is definitely a step in the right direction. These fuels will give better performance, and even more importantly will be better for the environment. We laud the Government for their proactive approach in this regard. We also would suggest taking our own environmental conditions into account for the next upgrade of our fuel standards, as our climate is quite different from Europe and therefore these peculiarities should also go be a factor when deciding the next level of upgrade in the standards.

Byco strongly advocates that the IFEM (In-Land Freight Equalization Margin) should be abolished in our view from Pakistan. The reason is simple: its net result is that it makes fuel more expensive for the end user and the Government’s stated policy is to give relief to the consumer. Let the market decide the prices and this will spur investment and innovation in the industry.

On the Government’s switching from monthly price determination to fortnightly basis for petrol, Byco strongly welcomes this wise move. It will make it easier to do business in Pakistan. In fact we are supporting a complete deregulation of the price as the Government has already done in the case of High Octane product in the past (HOBC). Let the market decide the price of fuels. This is how it is done in much of the world such as the U.S., U.K., Afghanistan, etc. This will open the market up to price competition which will be a healthy thing for all market participants, most of all for the end user, who will get cheaper products from the most efficiently run companies. Those that are not efficient will be weeded out and that is what our market desperately needs to happen.

BY MUHAMMAD ALI ASLAM, GM, FINANCE, BYCO PETROLEUM PAKISTAN LIMITED

Copyright Business Recorder, 2021