ISLAMABAD: The Ministry of Petroleum and Natural Resources has asked the Economic Coordination Committee (ECC) to allow opening of six abandoned oil depots that were earlier closed due to alleged dumping and misuse of the Inland Freight Equalisation Mechanism (IFEM).
The IFEM helps in maintaining transportation costs from local refineries and ports to depots.
A copy of petroleum ministry’s summary available with DawnNews disclosed that the ministry had sought the ECC’s approval because of undue delay by the oil marketing companies (OMCs) in developing petroleum products (POL) depots and a 21-per cent increase in the demand of petrol during last two years.
Petrol demand has risen mainly due to reduced availability of natural gas to Compressed Natural Gas (CNG) filling stations and use of petrol in generators.
“It is proposed that six abandoned oil depots may be re-opened under the IFEM. All OMCs will be entitled to avail the IFEM from these locations as and when they develop their depots at these locations,” read the summary.
“In the meantime, PSO [Pakistan State Oil] will supply products to the OMCs who have no storage at these areas/localities on commercial basis and mutually agreed terms and conditions for two years to avoid dry-out of retail outlets already developed by these OMCs. Ogra [Oil and Gas Regulatory Authority] will monitor the movement of products as per their Rules/Policy.”
The six abounded oil depots almost set to re-open are Daulatpur (Sindh), Khuzdar (Balochistan), Sangi (Sindh), Habibabad (located near Okara in Punjab), Kundian (Mianwali-Punjab) and Sereai Naurang (located near Bannu district in Khyber Pakhtunkhwa).
Daulatpur depot has a 7,550-tonne capacity of storage of POL products where high speed diesel (HSD) can be stored by 6,600 tonnes, motor spirit (MS) by 950 tonnes.
Khuzdar depot has a total of 2,040-tonne reserve capacity where HSD and kerosene can be stored by 1,600 tonnes and 380 tonnes, respectively.
With a total 6,095-tonne oil storage capacity, Sangi depot can store HSD (4,450 tonnes), MS (465 tonnes), kerosene (1,000 tonnes) and LDO (180 tonnes).
The fourth proposed oil depot, Habibabad, can store a total of 7,485 tonnes of POL products, including HSD (3,765 tonnes), MS (205 tonnes), kerosene (1,660 tonnes), LDO (1,855 tonnes).
Kundian depot has a capacity of 1,866 tonnes and can store HSD (701 tonnes), MS (94 tonnes) and kerosene (663 tonnes).
Sereai Naurang oil depot has a capacity of 1,261 tonnes. It can store HSD (343 tonnes), MS (247 tonnes) and kerosene (671 tonnes).
Seeking the ECC’s nod, the petroleum ministry has also advocated that by opening of the six depots, 26,000 tonnes of storage capacity would be available in the system with PSO and Shell Pakistan Limited. Other OMCs have to develop their own depots at the said locations to maintain stocks, it said.
“This will lead to increases availability of POL products and Petrol/High Speed Diesel days cover will also improve. Also, shortage of petrol will be overcome.
As per Oil Company Advisory Committee (OCAC), the cost impact on the IFEM is Re0.10 per litre on HSD and Re0.04 per litre on petrol on IFEM depots, which is meagre amount with reference to existing IFEM rates,” the ministry said.
Official sources told this scribe that after consultation with Ogra and OMCs the ministry had identified the six depots, which would be included in the IFEM if the ECC gave its approval.
At present, POL requirement in the country is about 21 million tonnes.
Ogra has introduced physical verification system at various locations to curb dumping, etc because of severe shortage in the Central/Southern Punjab during 2010 floods. Four depots located at Faqirabad, Kotla Jam, Sahiwal and Shershah were restored with the approval of the ECC.