Import of RON 92 Premium Motor Gasoline under study

The Ministry of Petroleum is considering allowing import of RON 92 Premium Motor Gasoline (PMG) which as compared with current RON 87 PMG (petrol) is more refined and environment-friendly. According to a summary of the Petroleum Ministry forwarded to the Economic Co-ordination Committee (ECC) of the Cabinet, Pakistan needs to improve both quality and standards of the petroleum products being produced by local refineries and imported by the Oil Marketing Companies (OMCs).
Accordingly, efforts are underway for introducing diesel oil conforming to Euro II specifications (0.05 wt percent) by mid 2017. Currently 87 RON PMG is being used in the country and the government is considering import of 92 or higher RON PMG in the country, the summary adds. A comparative price build-up for existing 87 RON PMG versus 92 RON PMG shows that, on a tentative basis the proposed fuel would be high in price from the main-grade fuel by about Rs 9 per litre; subject to the government approval, the process is expected to be completed within three months.
Marketing of petroleum products in Pakistan is being deregulated in a gradual manner since last 15 years. In the first phase, import and pricing of Fuel Oil (FO) was fully deregulated and import of remaining products like diesel and petrol has also been deregulated and OMCs are allowed to procure from international market on cost competition basis as per their commercial requirements; however, pricing of these products is being monitored by Ogra.
The first step in line with international best practices is the introduction of 92 RON PMG which is marketed around the world to reduce environmental impact due to lower emissions as a result of better engine hygiene; simultaneously it would provide an enhanced motor vehicle performance in a deregulated framework and the accrued benefits would include on account of supply sustainability, customer choice and improved tax revenues as this fuel would be sold at a higher premium against the existing fuel grade.
In order to undertake a controlled experiment for future full deregulation, it is proposed that OMCs may be allowed to market 92 RON PMG in a deregulated environment on their own risk and cost under the framework and applicable detailed product specifications to be notified under Pakistan Petroleum (Refining Blending and Marketing) Rules 1971.
The Minister for Petroleum & Natural Resources has authorised submission of the summary to the ECC. All approved OMCs would be able to import and market 92 RON PMG as a deregulated fuel at their own risk and cost. Necessary amendments for incorporation of 92 RON PMG in the Petroleum Products (Petroleum Levy) Ordinance 1961 and respective rules will be made accordingly.
87 RON PMG will remain the main grade and would continue to be a regulated product with no change in its pricing mechanism. The existing motor gasoline procurement from the refineries will remain unaffected. Inland Freight Equilibrium Margin (IFEM) will not be applicable on 92 RON PMG. Distributor and dealer margins for 92 RON PMG will be set by the respective OMCs at a reasonable level. The taxes/levies applicable on the existing 87 RON PMG will also apply on 92 RON PMG. Tax/levy collection would continue as per existing mechanism.
Oil and Gas Regulatory Authority (Ogra) will monitor the end selling price of 92 RON PMG. Quality/quantity testing procedure for 92 RON PMG would remain the same as being currently followed for regular imports. The product will conform to the specifications approved by the government for the purpose, while each OMC may adopt a unique colour of the product to distinguish it from the main-grade. Ogra and HDIP will undertake random checks at retail outlets for quality assurance. OMCs will announce retail prices on monthly basis, which shall be displayed and advertised regularly.
OMCs will ensure that dealers do not indulge in unfair profiteering. 92 RON PMG will be supplied through separate dispensers at retail outlets and OMCs shall develop separate/dedicated storage facilities at Karachi's main installations, up country depots and retail outlets. OMCS will ensure that no adulteration is witnessed while marketing of the product at their retail outlets. For that purpose, each OMC shall declare to Ogra its retail outlets, where it would like to market 92 RON PMG. Oil Companies Advisory Council (OCAC) will maintain import/sale data of 92 RON PMG procured and marketed by each OMC. The Ministry of Petroleum & Natural Resources may review this framework from time to time.