ISLAMABAD: Attock Oil Refinery (ARL) on Friday brushed aside speculations of petrol shortage in the country especially in the northern part of the country.
In an official statement, ARL said it strongly refutes the impression as overall share of ARL in country motor gasoline supplies is less than 5% and has marginal impact on the country level. ARL, being located in the north of the country, is the only refinery processing 100% indigenous crude and has been playing a proactive role and supporting government efforts by providing non-stop fuel supplies to the OMCs.
The strategic importance of ARL has been proven time and again by its ability to augment country's defence by providing uninterrupted supply of refined petroleum products to the armed forces during the critical time of war and any other incident affecting petroleum supply chain.
The business environment of the country during the last two years has remained very challenging and disturbing for the oil refining sector in Pakistan. Taking cognizance of the financial difficulties of the local refineries, Ministry of Energy (Petroleum Division) has formed a Refinery Working Group to work out different plans for mitigating refinery losses and formulate a comprehensive policy framework for future refinery expansion and up-gradation. Unfortunately due to COVID-19 pandemic, progress got delayed.
The spread of COVID-19 has a meltdown effect on the refinery sector in Pakistan in the shape of reduced sales and steep decline of petroleum product prices due to lockdowns resulting into huge inventory losses.
Three out of country's five refineries were forced to shut down in March/April 2020 due to low demand of petroleum products in the country for which the government in good faith temporarily put a ban on imports as OMCs had sufficient stocks. This was primarily done to ensure that OMCs increase their off-takes from the local refineries so that operations of refineries are maintained at adequate levels. This ban on imports was subsequently lifted.
The total inventory losses of the refining sector in Pakistan due to COVID-19 in March and April 2020 alone stand at about Rs34 billion. The combined financial losses of four refineries in the country stand at Rs47 billion for the last two financial years, i.e. 2018-2019 and 2019-2020 (July 2019 to March 2020). On top of it, the refineries for the month of June 2020 alone are losing about Rs17 per litre on sale and production of each litre of motor gasoline, yet providing the same only in the national interest.
Due to these reasons, the refineries are forced to operate at low throughput. All these facts have been brought into the knowledge of GOP and urgent support of government has been sought to ensure sustainability of refinery operations. It must be noted that refineries should be enabled to run at 100% capacity to reduce reliance on imports.
ARL is of the view that it also needs to be understood that all refineries have to keep certain levels of operational stocks to avoid any unplanned shutdown situation of its main downstream units and the same is the case with ARL which does maintain certain levels of stocks to provide regular and uninterrupted supplies and the same should not be termed as hoarding. Instead of a blame game approach, there is a dire need to review and analyze underlying reasons for present shortages of petrol in the country and look for a long-term sustainable solution which includes revision of Downstream Petroleum Policy - the last one having been issued in 1997, fortnightly pricing, bailout package for the refineries and creating a conducive business environment in the country otherwise a similar situation could arise with more severity in future.