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KARACHI: With the demand of petroleum products expected to bounce back in fiscal 2020-21, investments in the ongoing oil pipeline projects will help in safe, reliable and cheap transportation of petroleum products across Pakistan, industry sources said.

At present, imported oil products move from Karachi to central parts of the country in the 870-km Karachi-Mahmoodkot (KMK) Pipeline and 362-km Mahmoodkot- Faisalabad-Machhike (MFM) Pipeline, they added.

The $480 million White Oil Pipeline (WOP) is another mega project involving Pak Arab Pipeline Company Limited (PAPCO) and some oil marketing companies to transport diesel to the central regions of Pakistan. The current share of pipeline in transportation of white oil products transportation is 37 percent, which will increase to 67 percent following the dualization of PAPCO and MFM pipelines.

However, from Machike towards North of Pakistan, all oil products are transported through tankers that are known to violate road safety laws, lead to traffic congestions and damage the highway network in the absence of axle load policy implementation. The Frontier Oil Company 1, a subsidiary of Frontier Works Organization, is constructing the Machike-Thallian-Taru Jabba White Oil Pipeline (MTT WOP) Project till Peshawar for safe and cheap transmission of oil products to northern parts of Pakistan. After commissioning of this network, the share of pipelines in oil transportation will grow to 86 percent, which is in line with other developed economies of the world.

Together, the provinces of Punjab and KPK account for nearly 74 percent of the national demand. The timely development of oil pipeline projects is expected to cater to the country's rising demand of petroleum products, especially in the far-flung areas of central and northern Pakistan. Therefore, the traditional road transportation system of oil tankers will not be able to sustain the growing demand pressure. Further, in case the axle load policy is implemented, it is likely to increase the transportation cost significantly, which would adversely impact the end consumer price of petroleum products.

In 2017, a tanker explosion near Ahmedpur East, Bahawalpur District, had prompted the government to expedite oil pipeline projects and introduce stricter road safety regulations. However, the compliance of tankers with required standards of safety and journey management remains challenging for the industry and regulatory body of OGRA.

The oil tanker mafia has also been accused of stealing furnace oil worth USD 200 million on an annual basis during transportation, and threatening strikes to pressurize the government and oil companies. In view of the continuing threats of strikes by the Oil Tankers Association, the government had decided to expedite efforts to expand oil pipeline projects.

Copyright Business Recorder, 2020