ARIF RANA
ISLAMABAD (June 16 2007): The new oil pricing formula based on Singapore model is likely to replace existing Caltex-Bahrain formula from July 1. Caltex-Bahrain oil pricing formula is in practice in Middle East (ME) and Pakistan fixes prices of petroleum on its basis since 1967.
Sources told Business Recorder on Friday that Caltex-Bahrain oil pricing formula will become redundant from June 30, this year as data from this source will not be available to work out price in Pakistan. This had made mandatory for the government to switch over the some other alternative source for getting data and fix oil price from the first day of the next fiscal year for the consumers.
Sources said the ministry of Petroleum is working on different models to replace existing oil pricing formula including Singapore model, which if picked up and implemented, will fix 90 RON minimum level for assessing quality of petroleum prices and fix price, the government to tax this key item of revenue generation and end consumers.
Now different refineries are producing different RON petroleum products ranging from 88 to 90 RON and this does not bring any penalty or disadvantage for refineries producing low RON petroleum products. But in sheer contrast to this RON over and above 90 can bring premium for the refineries and for the same exiting Caltex-Bahrain oil pricing formula was equally acceptable for modern as well as outdated refineries.
PARCO being a modern and art of the technology refinery is producing 90 RON petroleum products and so is the case with NRL after upgradation. But Attock being outdated is producing comparatively low RON petroleum products. But existing formula low Ron does not b ring any disadvantage for it.
Low RON means low quality petroleum products but high pollution level. Petrol coming into Pakistan through smuggling is as low as 76 RON and for the same its one of the highest pollution creators in the world.
The petroleum industry calls Iranian petrol as benzene pollution creating product. But its share in Pakistan's market is on the rise for the last few year due to substantially low price.
Copyright Business Recorder, 2007