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Govt mulls surcharge to boost POL storage capacity

August 17, 2017

ISLAMABAD: The government may soon impose a surcharge on the sale of all transport fuels to enhance storage infrastructure and product stockpiles for strategic defence requirements.

This is part of the recommendations of a high-powered committee on strategic planning for oil and gas stocks and storages comprising top officials of the various arms of the federal government, military and private sector.

The committee also seeks to beef up security at all key oil and gas installations and extend security cover to additional pipelines and other infrastructure.

“No decision has so far been made, but a proposal was discussed to levy a storage charge at the rate of 10 paisa per litre on petroleum products to enhance strategic reserves to at least 45 days of consumption,” a senior official told Dawn.

However, he clarified that no formal summary had been moved to the Economic Coordination Committee of the cabinet or the federal cabinet. He added that a similar proposal was also discussed at the fag end of President Musharraf’s rule, but it went nowhere.

Current infrastructure for petrol reserves is significantly lower than required level

The official said reserves of petroleum, oil and lubricant products for 45 days must be maintained at all times as strategic reserves or war stamina. Of this, the armed forces are required to maintain 20 days of general service reserve and the stocks for the remaining 25 days should be ensured as strategic reserves by the petroleum ministry through oil marketing companies (OMCs) led by Pakistan State Oil.

The armed forces are duly maintaining their part of the stock. They keep pushing the petroleum ministry to replenish any shortfall when OMCs fail to top up the reserves.

Under the existing Pakistan Petroleum (Refining, Blending and Marketing) Rules 1971, companies are bound to maintain minimum stocks of each product. Moreover, the government is empowered to direct them to top up their storage for at least 20 days during emergencies or war.

The defence authorities have now asked the government that it should be made binding on all OMCs to maintain 25 days of stocks for the armed forces at all 22 designated depots. The fortnightly stock positions should also be submitted to the defence authorities, they said.

Officials said the storage capacity and stockpile of petrol are a cause for concern as they are significantly lower than the required quantities. However, the country has diesel storage capacity for more than 45 days of reserves.

For example, the total storage capacity (not stocks), including those with refineries, oil companies, institutions and pipelines, provided cover for maximum 19 days of normal consumption. Stocks at any given time seldom touch 15-day coverage even when oil prices are at the lowest ebb.

Sources said oil and gas companies have been directed to enhance patrolling and security of key points, like storage depots, pumping stations and distribution points, and coordinate with paramilitary and military authorities for improved security.

These companies have also been asked to embark on a plan to gradually underground all transmission and distribution lines. Meanwhile, they have been asked to camouflage the exposed pipelines and installations.

They said these will be treated as updated standard operating procedures for all times with the help of the latest technological and communication techniques.

Published in Dawn, August 17th, 2017