Experts Say Premature Transition To Euro-V Fuel Can Lead To More Harm Than Good

Islamabad Policy Institute (IPI) recently urged the government to review its timeline for the implementation of Euro-V fuel standards in the country to enable the stakeholders to adequately prepare for the transition. It also warned that a hurried shift could adversely affect the intended goal of environmental improvement.

IPI launched its report titled ‘Rushed Transition to Euro-V Standard Fuels: Need for A Public Debate’ at a virtual event. The report, which points out the inadequacies of the downstream sector of petroleum industry for such an immediate jump from Euro-II to Euro-V standards, has been authored by IPI’s distinguished fellow Dr Ilyas Fazil, who has previously served as a member (oil) in Oil and Gas Regulatory Authority and as the chief executive officer of Oil Companies Advisory Council.

As per the government instructions, all petrol imports from September 1, 2020, would have to be in accordance with Euro-V specifications. Meanwhile, in the next few months diesel imports too would have to comply with the new standards.

“Introducing fresh specifications for transport fuels – premium motor gasoline and high-speed diesel – is a very serious issue and entails looking at the decision holistically which was not done in 2016 nor appears to have been done this time either,” Dr Fazil said at the launch event.

The report has raised questions about the readiness of local refineries for producing Euro V fuels; limitations of the existing retail network and upcountry storages; improperly defined Euro-V specifications; inadequate product testing capacity of the relevant institutions; and the presence of Euro-V compliant engines on the country’s roads.

The report maintains that unless the shortcomings highlighted are adequately addressed, not only will the desired environmental impact not be achieved, but importantly Pakistan will be spending millions of US dollars without justification. This would have a negative effect on the balance of payments deficit, and at the same time overburden the consumers.

“The problems faced by oil marketing companies and the country’s import infrastructure due to variation in specifications, terminal storages along with dispensing units at the Retail Outlets will definitely lead to product shortages if not recognised and immediate action is not taken to remedy them,” Dr Fazil warned.

He opined that the transition cannot be completed unless the refineries are upgraded to produce Euro-V standard fuels, which may take up to three years. “Unless that happens there would be greater reliance on importing Euro-V fuel, which could cost millions of dollars to the national exchequer,” he maintained.

IPI Executive Director Prof Sajjad Bokhari said the objective of the report is to initiate a much needed public debate about the government’s move, which carries a certain air of abruptness.

IPI as a think tank, he said, advocates a gradual transition to allow time for related requirements to be met.

“It is hoped that the government would review its deadline for the introduction of Euro-V in the country and come up with a realistic roadmap so that the stakeholders get sufficient time to make necessary arrangements for a meaningful transition,” Prof Bokhari emphasised.

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