One step forward and two steps back

That is how things are turning out under the PTI’s government. Attracting (undue) attention is the idea floated by Dr. Abdullah Malik, and OGRA official and also a senior research associate at Newcastle University London – the government is considering bringing back three-decade old fuel specification for motorcycles. The proposal is that of re-introducing 82Ron motor gasoline for the two-wheelers in an attempt to reduce the import burden.

While a savings of over $1 billion in imports looks attractive as 30-40 percent of the petrol is being used by the motorcycles in auto sector, the likely move has been met with an outcry among almost all the stakeholders.

First, the downstream sector does not seem to be on board. Though the government’s rationale of making use of outdated and unutilised domestic refining capacity might entice the refining segment, OMCs have been opposing the idea as they would have to make additional infrastructural investment at not only their retail outlets in form of additional nozzles, but also increase their storage infrastructure to carry 82Ron fuel.

Second, the motorcycle dealers are also not enthralled about the proposal. The auto dealers are already facing issues regarding fuel average and efficiency due to the quality of fuel that is being used, for which the OMCs have been reverting to additives to improve the quality of fuel. Bringing 82Ron means going further down on fuel quality.

Motorcycle users too might not benefit so much as the industry experts highlight that there are also instances where motorcycle users have been opting for Hi-Octane blend versus the regular fuel to improve their vehicle’s life and its wear and tear.

At the association level, Pakistan Automotive Manufactures Association (PAMA) has too reportedly opposed the proposal.

And then there are the environmentalists. The country only upgraded to 92Ron in the last couple of years from 87Ron. And apart from the international pressure to upgrade the fuel quality, the refining segment has been collecting deemed duty from the consumers for more than 10 years to upgrade their facilities to produce higher grade environmental friendly fuel. Going back to decades old fuel quality is not being taken well by the environmental enthusiasts.

While the rationale given is that of cheap alternate fuel which would help in reducing import bill, industry insiders believe that amid rising petroleum prices, introducing low grade fuel, which will be at least Rs10-12 per litre lower than the existing prices is an ad hoc relief to the motorcycle commuters who are generally considered to be on a lower rung of per capital income ladder. With little to no acceptance from all kind of stakeholders, looks like the government is in for some serious opposition.