Government has issued a notice which directs the oil industry to import petrol and diesel no less than Euro-V standard from Aug 1, 2020, and Jan 1, 2021, respectively. This decision has generated a kind of resistance mood among the oil industry against the government, as the oil industry already poles apart on petroleum pricing mechanism and regarding the issue of 20-day stocks.
The oil industry has given a number of reasons that prove that the given instruction is not possible to practice. This decision will cause Rs7-8 per litre price hike and $200 million annual foreign exchange loss. The Oil Companies Advisory Council (OCAC) sent a letter to the Petroleum Division, explained that it is impractical for them to compliance of EURO-V with other fuels. They also highlight the expected cost of the shift in energy, which is dreadful. The industry has realized its impact on its storage and logistics of OMCs at every stage; from port to retail outlets, which can give serious damage to the country’s economy.
This shift of energy is also not easy from the consumer end. Consumers will have to pay more price than they are paying right now. Moreover, the condition of country’s motor vehicles is not in a position to accept the shift in nature of the fuel, as there are a large number two- and three-wheelers vehicle and very old cars as well which are consuming more than 50pc petrol. The oil industry demanded a smooth and step by step shift in energy as other countries did, which will not disturb the supply chain, avoid a sudden shift in price, give time to examine its environmental benefits, upgrading the engines of vehicles and giving sufficient time to local refineries to prepare their plants.
