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Unjustifiable price hike in POL prices
April 15, 2011
• Petroleum Development Levy charges are being charged by the government since early fifties and now Petroleum Levy is charged by the government. As a rough estimate, over trillions of dollars have been received by different governments of Pakistan. Where are these huge amounts and what developments have been made?
• Pakistan must upgrade its refineries to obtain “EURO IV” standards of petroleum products since it is apprehended in the wake of disasters caused by global warming that no nation shall be allowed to use below standard specification of petroleum products in near future. Even the threat of UN sanctions is in the offing.
• Pakistan has five refineries having a total refining capacity of 12.6 million tons of crude annually. All these refineries are not working to their full capacity. The government must look into this and take corrective steps in the larger interest of the people of Pakistan.
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Parliament, the Ministry of Petroleum and its appointed stewards have grossly misguided Prime Minister Yousaf Raza Gilani about the prices of petroleum products. The prime minister says he has no idea of reducing the petroleum prices and the only option is to provide subsidy that the government cannot afford. The others sitting outside the corridors of power frequently declare in both the print and electronic media that mid-term election is the only solution lest a bloody revolution should take place, creating unrest in the country. Some even seek the intervention of undemocratic forces for a change in the system.
I have great respect for the founding chairman of Pakistan People’s Party Shaheed Zulfikar Ali Bhutto and his daughter Shaheed Benazir Bhutto and am of considered opinion that the present government must complete its term. I feel disturbed that the coalition partners are also not giving any good idea instead they are engaged with others in agitation with warnings of a revolution. The country’s institutions and economy has paralyzed due to long periods of martial laws.
A number of parliamentarians and those appointed as chief stewards in the institutions lack educational and professional qualifications to streamline the affairs. Consequently, the entire system, including the economy, is in a shabby state. It is high time for every educated professional citizen to suggest ways and means to streamline out the ailing economy for provision of relief to the downtrodden. Fuel prices are fundamentally responsible for an unbearable rise in the prices of all commodities.
I suggest the following steps to the government for provision of immediate relief to the people,
• The premium price of Light Sweet Crude namely Brent, West Texas Intermediate, Ninian crude oil is quoted but the government neither imports such crude oil nor any Pakistani refinery refines these premium grades of light sweet crude oils. It is unfair on the part of government to quote the prices of premium priced crudes.
• The price of Light Sweet Crudes is considered as a benchmark for fixation of other heavy/light sour crude oils. Consequently, any rise/fall reflects in all other sour crude oils.
• Pakistan imports heavy/light Arabian crude from Saudi Arabia, crudes from the Gulf States and Iran. Crude oils used by Pakistani refineries are also available from Malaysia, Indonesia, Nigeria and other countries. A comparative analysis of the crude properties such as its viscosity, specific gravity, yield, sulphur, carbon and other contents including its calorific value is to be made by the stewards appointed by the government. The government should regularly review such analytical reports each month and obtain crude oils from the cheapest sources.
• The number of rig counts for oil exploration is not a measure of performance and success. The rig having no oil is considered as a “dry hole”. Even if oil is found and assessments reveal its use as uneconomical, the hole is considered as “dry”. Millions of rupees are thus wasted away. The crude oil wells having crude must be regularly pumped with carbon dioxide to obtain more oil.
• Some three years back the GOP declared that crude obtained in Pakistan was 3.2 million tons. Since then some two 230 rigs have been excavated and now definitely the crude obtained should have reached over 4 million tons. We do not have enough storage capacity so further rigs excavation must be stopped to avoid losses.
• Firstly, the government should note the quantity of crude loaded by tankers from the bunkering ports. Secondly, note the quantity of crude discharged at ports in Pakistan and the wharfage charges by the port authorities. Thirdly, the quantity of crude received at the refineries. Startling facts of corruption and theft shall be revealed if the government takes appropriate steps to streamline affairs.
• The details of petroleum products obtained from refineries could be seen in my article captioned “Govt loot in the name of oil” published in the February 11-17, 2011 edition of this weekly. Quite recently, the government had stated that refineries do not provide the details of petroleum products to the authority that fixes the fuel prices. In the absence of such details, it is a mad man’s dream to fix prices of gasoline, diesel and kerosene that actually affects the people of Pakistan.
• The prices of petrol, diesel and kerosene which directly affect the masses should be fixed in strict conformity with the “OGRA ORDINANCE” wherein it is mentioned that these prices shall be fixed in consideration of providing relief to the people.
• The incorrect government policy of award of “First Right of Refusal” and “exclusive right of transportation of crude to refineries” to PNSC in clear violation of the OGRA Ordinance and the Competition Commission of Pakistan must be immediately withdrawn. Open tenders are to be invited that shall result in reducing the cost of transportation thereby reducing the price of gasoline, diesel, kerosene and other products by at least three/four rupees per liter. Furthermore, private entrepreneurs will invest in shipping. Our fleet will increase, creating more jobs and reducing our dependence on foreign flag ships to cater to our seaborne trade thereby savings of millions of dollars in foreign exchange.
• In a number of Pakistani refineries a major portion of virgin crude is directly led to the “Furnace oil chamber. It is imperative to install “Hydro Crackers” and “Catalytic/Thermal Crackers” to obtain a further yield of 32-35% of diesel and 20-22% further yield of petrol and in the second case a further yield of 32-35 % of petrol and 20-22% further yield of diesel. The refineries may decide to install these crackers in accordance with the national requirements. Our present dependence on import of diesel costing Pakistan millions of dollars shall thus be saved. The “deemed duty” is charged on imports of diesel but the same duty is also charged on our own produced diesel, which is quite unfair and should be stopped. The installation of crackers shall also reduce the price of diesel and petrol at least by some Rs 28.00 per liter.
• The crude obtained in Pakistan could only be processed/refined at Attock Refinery. After certain modification and BMR, other refineries shall also be able to process/refine crude obtained from Pakistan thereby savings our import bill. If care, efficiency and honesty is exercised during excavation all domestic requirements of crude could be easily met by our own crude. This will totally reduce our bills on import of crude. The cost of petroleum products in such case shall at least be reduced by 60-70%.
• Due to global warming and climate change the entire world is confronted with the havocs of earthquakes, tsunamis, floods, severe flooding of coastal areas, stormy seas, melting of glaciers at astounding rates, drop in agricultural products, causing major portions of earth becoming inhabitable and barren, mass migration of people, loss of human lives and property, droughts, spread of deadly diseases etc. All this necessitated the world to reduce emission of “Greenhouse Gases” mainly due to the use of fossil fuels. The developed part of the world has adopted “EURO IV” standards for petroleum products. Even India has managed “EURO IV” standards where the petroleum products contain a maximum of 50 ppm of sulphur. Environmentalists further suggest that by the year 2020 the quality of petroleum products shall be further improved to contain 10 ppm of sulphur. The price of such petroleum products has been increased, but in Pakistan the petroleum products contain 1000-2000 ppm of sulphur and use of these products is highly detrimental to human life, health and even to the existence of the planet. How silly it is that the government has recently increased the price of petroleum products on the premise that since internationally the prices of petroleum products are increased, it has also increased the price of petroleum products. This is criminal.
• Petroleum Development Levy charges are being charged by the government since early fifties and now Petroleum Levy is charged by the government. As a rough estimate, over trillions of dollars have been received by different governments of Pakistan. Where are these huge amounts and what developments have been made?
• Pakistan must upgrade its refineries to obtain “EURO IV” standards of petroleum products since it is apprehended in the wake of disasters caused by global warming that no nation shall be allowed to use below standard specification of petroleum products in near future. Even the threat of UN sanctions is in the offing.
• Pakistan has five refineries having a total refining capacity of 12.6 million tons of crude annually. All these refineries are not working to their full capacity. The government must look into this and take corrective steps in the larger interest of the people of Pakistan.
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