The government has been trying to upgrade Pakistan’s fuel to the lower emission producing Euro-5 standard to lower air pollution but it will be an uphill task as oil refineries may resist because they will have to upgrade their plants.
The government has asked the oil marketing companies such as PSO, Shell and Hascol to import only Euro-5 standard petrol from September 1 and diesel from January 1. It has started upgrading fuel standards with PSO already with Euro-5 available at 56 of its pumps in Karachi, Lahore and Islamabad and Jhelum, Gujranwala and Hyderabad next. PSO has over 3500 petrol pumps.
The Euro-5 standard fuel is offered at Rs120, approximately Rs20 more than normal fuel.
Euro-5 standard fuel minimizes the impact on the environment because it has 98% lower Sulphur and 80% lower Benzene levels. This reduces harmful vehicle emissions and improves engine performance. Lower Benzene content is better for the occupational health of industry workers.
Experts say an increase in the vehicle population and use of low-quality fuel has been causing seasonal smog in Punjab, especially Lahore. Introducing a better fuel can help combat this.
But even if refineries agree with the government to produce Euro-5 standard fuel, they will need three years to upgrade their production units. Moreover, the storage system will not make it possible for oil marketing companies to offer Euro-5 fuel separately.
The ratio of use of petrol and diesel in Pakistan is 40:60, according to JS Global Capital research analyst Arsalan Ahmed. Diesel is used mainly by commercial vehicles such as buses, pickups and trucks, which consume more fuel. Up to 70% of diesel is produced locally and the rest has to be imported. Roughly 60% of petrol has to be imported.
“There is resistance from OMCs but all fuel imports can be upgraded to Euro-5 standard,” said research analyst Atif Zafar. “But it doesn’t mean that all fuel to be used in the country will be of the Euro-5 standard. The local refineries are not capable of producing Euro-5 standard fuel at the moment. They will have to spend money and time to upgrade.”
Analyst Arsalan Ahmed thinks the government will mainly focus on Punjab areas most-affected by smog. But the rest of the country would be getting a mixture of Euro-2, the fuel standard being used in Pakistan at the moment, and imported Euro-5.