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Asim Hussain calls oil refineries a ‘mafia’

July 20, 2012

ISLAMABAD, July 19: The ministry of petroleum on Thursday described the country’s oil refineries as ‘mafia’ since they were seeking further extensions in upgrading their oil products that included the production of low sulphur diesel, or Euro-II compliant diesel.

The Euro-II standard, which has more stringent emission standards for new vehicles, was adopted by the government in 2009 and the Ministry of Petroleum directed all refineries to produce Euro-II compliant diesel by January this year.

However it extended the deadline to 2014.

“Now they (oil refineries) are presenting various pretexts and trying to extend this deadline too,” said Dr Asim Hussain, adviser to the Prime Minister on Petroleum and Natural Resources, at a meeting for climate change.

He added that the refineries also wanted the government to finance for up-gradation of their plants, where one plant could cost as much as $400 million.

The Minister for Climate Change, Rana Farooq, also expressed his concern over the delay of refineries to adopt the Euro-II standard.

“Oil refineries should be bound to set up plants to introduce Euro-II diesel for clean energy and they should not be given more extension in setting these up gradation units,” said Mr Farooq, adding that there should be strict enforcement.

The meeting proposed to give refineries six months to set up plants to introduce Euro-II.

Officials at the Petroleum Ministry said the two giant refineries, National Refinery Ltd and Attock Refinery Ltd, which currently enjoyed a monopoly would not be able to once Byco Oil Pakistan Ltd new refinery becomes operational. Along with Byco’s existing 35,000 bpd refinery, the commissioning of the new refinery will make it the single largest crude oil refiner in Pakistan. It would also produce Euro-II grade diesel.

Meanwhile, neighbouring country India is steps ahead and introduced Euro-III and IV, according to the Ministry of Commerce and Pakistani auto manufacturers and the government were eyeing the Indian market to export their vehicles.

“Both the government and the auto manufacturers in Pakistan are vying to export vehicles to India,” the officials said.

“Therefore, we need to go to diesel Euro-II, III and IV to enter international auto markets including India.”

A shift towards Euro-II diesel would also require adequate changes in technology such as upgrading the vehicles to be compliant with low-sulphur diesel, according to Aitazaz Niazi, CEO of Engineering Development Board.

“If the efforts are not simultaneous, then any one sector could suffer significantly and the end loss would be faced by the consumers,” he said.