The Ministry of Petroleum and Natural Resources is expected to give another year and a half to local refineries to upgrade their plants by installing Diesel Hydro De-Sulpurisation (DHDS) by June 30, 2017. In 2010, the local refineries were directed to upgrade their plants by January 2013. Failure to meet the deadline first led to an extension up to June 30, 2014, and then to January, 30, 2016.
Sources said that the government, on the request of the refineries, was expected to extend the deadline by a year and half to June 30, 2017.
Local refineries in 2010 were directed to upgrade their High Speed Diesel (HSD) refining units as per international standards and bring them at par with Euro-II standards. From 2010 to 2014, the government as an incentive allowed the local refineries to utilise the deemed duty of 7.5 percent, which in 2014 was raised from 7.5 percent to 9 percent to provide a cushion to refineries to upgrade their systems.
At present, Pak Arab Refinery Company (Parco) has fully installed DHDS, while Attock Refinery Limited (ARL) and Byco are in the process of installing the DHDS plants. All other refineries are still producing HSD with sulphur content in the range of 0.25 percent to one percent, "despite repeated reminders and pricing incentives given to them by the government to set up DHDS at their plants to produce low sulphur (0.05 percent) Euro-II grade HSD".
When the official was asked why the local refineries failed in installing DHDS plants, he said that the plants of Pakistani refineries were too old and to replace these plants every company needed at least $200-300 million dollars.
When contacted, an official of Oil and Gas Regulatory Authority (Ogra) said that the objective of installing Euro-II standard was because it was environment-friendly. He urged the government to compel the local refineries to install DHDS plants and added that India was moving towards Euro-IV HSD standards, while Pakistan was still selling and producing higher sulphur content diesel.
A representative of the Oil Companies' Advisory Committee (OCAC) said that financial incentives provided in the past had built up a substantial reserve fund, but its major portion was set off against losses suffered by refineries.
Pakistan State Oil, the largest HSD importer, had already shifted its benchmark Freight on Board (FOB) price from 'Gasoil 0.5 percent' to 'Gasoil 0.05 percent' for fixation of import price of HSD imported from Kuwait Petroleum Corporation since January 1, 2013.
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