OCAC refutes misleading report on diesel quality, defends role of local refineries

ISLAMABAD: The Oil Companies Advisory Council (OCAC) strongly refutes a report about the quality of high-speed diesel (HSD) produced by local refineries. The article, on one hand, reflects amateurism as it is devoid of facts, and on the other hand, appears to be written with vested interests and fails to provide an accurate picture of the local refining sector. Local refineries are strategic national assets, playing a vital role in Pakistan’s energy security and economic development.
The suggestion that diesel imports are necessary due to poor local quality is misleading. Refineries in Pakistan produce diesel in accordance with specifications notified by the Ministry of Energy (Petroleum Division). Importing a single cargo of HSD costs approximately $ 45 million in foreign exchange—an unnecessary burden when adequate local supplies are available.
Over the years, refineries have invested in upgrade projects, including capacity expansions and the installation of Isomerization and Diesel Hydro Desulfurization (DHDS) units, enabling them to improve fuel specifications. Currently, Pakistan’s refineries produce HSD with sulfur content ranging from Euro I to Euro V. One refinery already produces Euro V-compliant diesel, two supply Euro III, and the remaining produce diesel with sulfur content around 5,000 ppm—far lower than the inaccurately reported figure of 10,000 ppm. Notably, even the refinery producing Euro V diesel faces challenges with product upliftment due to inconsistent offtake by certain companies, resulting in operational difficulties. Delays in the Brownfield Refineries Policy 2023 implementation have affected timelines and is already in the knowledge of authorities. After the successful upgradation of the refineries, all the local refineries will be supplying Euro V fuels. Product pricing remains aligned with specifications, as refineries producing sub-Euro V diesel are subject to a differential cost. This cost is recovered from refineries that do not produce HSD in accordance with government/import specifications.
The recovered amount is incorporated into the Inland Freight Equalization Margin (IFEM) and passed on to consumers, ensuring that there is no additional financial impact on local consumers due to the difference in specifications. Refineries operate under regulated licensing conditions, and it is evident to any loyal countryman that local production cannot be fairly compared to imports, as a trade deficit driven by excessive imports can harm any economy—something the author of the said article seems unable to grasp. It is important to note that a significant portion of Pakistan’s transport and agricultural sectors does not require Euro V diesel, making locally produced grades both suitable and efficient for market needs. Finally, smuggled and substandard fuel entering the market is the real threat to product quality and market stability.
Additionally, all information is available with OGRA regarding certain companies that have made no local purchases for almost a year and have stopped HSD sales from their retail networks—possibly promoting smuggled product. Continued reliance on local refineries enhances energy resilience, curbs foreign exchange loss, and ensures a stable fuel supply for the country. Ends