Islamabad: Pakistan has "shelved" plans to import petrol, diesel and other petroleum products from India till 2014 due to differences in product specifications used in the two countries, according to a media report Tuesday.
Pakistani refineries produce 'zero-euro' quality oil, whereas Indian refineries produce Euro-3 and Euro-4 quality oil, which is cleaner and more environmentally friendly.
Pakistan is still preparing a roadmap to introduce Euro-2, Euro-3 and Euro-4 for clean energy, The Express Tribune reported.
"Pakistani refineries have been tasked to produce Euro-2 quality diesel by July 2014 and therefore the government wants to shelve the plan of oil trade with India till then," an unnamed official said.
Another reason for the decision is that Pakistan has inked an oil supply contract with Kuwait Petroleum Corporation that is valid till 2014, the official said.
Pakistan also plans to meet only 20-25 percent of its needs for petroleum products from India to avoid over-reliance due to security concerns.
"We will continue to import oil from Kuwait and other Gulf countries in a bid to ensure secured supplies," a government official said.
Another official of the Engineering Development Board said the use of Euro-3 and Euro-4 fuels would cause a technology shift and it would be difficult to run existing vehicles on fuel produced in India.
"Different specifications of petroleum products have barred the countries from reaching any agreement," a senior unnamed government official said.
Pakistan, during talks held in New Delhi in the second week of July, asked Indian refineries to change specifications to meet requirements of the Independent Power Producers operating in Pakistan but they refused to do so, the report said.
"We have long-term agreements of supplying oil with certain specifications to IPPs," according to the government official quoted.
The other stumbling block is the high cost of transportation due to the long distance involved. Indian refineries that produce furnace oil are located in the south of the country and cater to Sri Lanka and Singapore.
In the case of petrol and diesel, Indian refineries are producing Euro-3 compliant fuel for remote areas of the country, while Euro-4 quality fuel is being supplied to big cities like New Delhi, Mumbai and Kolkata.
These fuels are very environment friendly while Pakistani refineries, except Pak-Arab Refinery Limited, are producing low quality petrol and diesel.
On the other hand, Pakistan is using better quality furnace oil with 3.5 percent sulphur content, while India produces furnace oil with sulphur content with 4-4.5 percent.
Pakistani refineries collected over Rs 150 billion from consumers in the last few years under a special tax deemed duty. The amount was to be used for upgrading plants to produce Euro compliant fuel but refineries, except Parco, failed to do so.
The refineries are now demanding permission to charge more in order to collect USD 1 billion from consumers to upgrade plants to produce Euro-2 petroleum products.
First Published: Tuesday, September 4, 2012, 20:39