Oil Refineries Say No To Ethanol-blended Gasoline
Citing technical reasons, oil refineries in Pakistan have refused to take up the refining task of ethanol-blended motor gasoline. The refineries have asked the government that Oil Marketing Companies (OMCs) should work on the subject of ethanol-blended motor gasoline refining.
The government is working on different options of alternative resources for fuel to reduce the dependence on the import of petroleum products that were putting burden on the foreign exchange reserves. The country’s import bill was over 11 billion dollars during the last financial year, which could exceed 14 billion dollars during the current financial year. The higher import of petroleum products is the major reason to deplete the foreign exchange reserves.
According to sources, oil refineries have also refused to take up the refining task as they claim loss of about 44 million dollars per year on the export of additional surplus of 135,000 tonnes naptha due to blending of ethanol in gasoline.
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Sources said that the committee working on the ethanol-blended motor gasoline had proposed to the Oil and Gas Regulatory Authority (Ogra) to determine the prices of ethanol-blended motor gasoline.
The existing oil pricing formula would also be applied to the prices of ethanol-blended motor gasoline. The government will charge Petroleum Development Levy (PDL) and General Sales Tax (GST) on the ethanol-blended motor gasoline and the Petroleum Ministry has worked out the maximum ex-depot sale price of E-10-based ethanol-blended gasoline at Rs 77.89 per litre, 78.40 per litre, Rs 78.91 per litre and Rs 79.43 per litre following price of molasses at 70 dollars per tonne, 80 dollars per tonne, 90 dollars per tonne and 100 dollars per tonne respectively. These prices include the Petroleum Development Levy (PDL) of Rs 28.84 per litre, 0.30 per litre freight charges, Rs 1.21 per litre to Rs 1.28 per litre Oil Marketing Companies (OMCs) margin, 0.20 per litre OMCs return on the infrastructure investment, Rs 1.39 per litre to Rs 1.47 per litre dealers commission and 16 percent GST.
Pakistan’s existing production capacity of fuel grade ethanol is 271,800 tonnes annually as against 400,000 tonnes production potential per annum. Local price of ethanol will depend on the purchase price of molasses by the distilleries and government intervention is necessary to control the price of molasses, which are an exportable commodity and an agricultural product with basic use in cattle feed. The exporters exported 234,060 tonnes ethanol in nine months from January to September 2008 as against 255,000 tonnes in the 2007 calendar year.
