Iranian diesel being smuggled into Pakistan in huge quantity

According to a report by The News International, around 8,000 tons high speed diesel (HSD) is being smuggled into Pakistan from Iran on a daily basis.

Huge quantities of smuggled Iranian HSD has not only had a significantly devastating impact on the production of the domestic refineries, which have a combined HSD production capacity of about 15,000 metric tons per day, but it has also inflicted heavy revenue losses worth billions on the government, Attock Refinery Limited CEO Adil Khattak said.

The Government of Pakistan either does not understand the gravity of the situation or was just turning a blind eye due to the shortage of foreign exchange required for legal imports of the deficit products.

Smuggling of petroleum products from Iran to a limited extent has always been happening in connivance with border authorities, but the scale has never been this huge and unparalleled, which if allowed to continue unabated could lead to the shutdown of local refineries.

Khattak said that the impact of this smuggled HSD had already started showing with Attock Refinery reducing its output to 25% only.

“What is even more alarming is that the emboldened smuggler mafia, with no fear of any reprisal, is offering supply of smuggled products to OMCs (oil marketing companies) on discounted rates minus the petroleum development levy (PDL),” he said. With the presence of some unscrupulous elements amongst the OMCs, their involvement in this criminal activity cannot be ruled out.

Oil and Gas Regulatory Authority (OGRA), Interior Ministry and the border authorities need to wake up before it was too late.

Earlier, Attock Refinery had written a letter to OGRA asking for intervention to ensure the uplifting of HSD by OMCs on consistent basis to help the company operate at an optimum level.

Attock Refinery on Wednesday had announced that it would shut down its plant due to the ongoing smuggling of petroleum products from neighbouring countries.

The refinery announced that oil marketing companies had been slow to uplift HSD from Attock Refinery in recent months, due to the possibility of smuggled products entering the supply envelope.

This has led to a build-up of HSD stocks at the refinery, with very little or no space available in storage tanks. As a result, the refinery has been left with no choice but to shut down its main distillation unit, which has a capacity of 32,400 barrels per day (BPD), for a period of five days, a company statement said.

During this time, the refinery will partially operate at around 25% capacity to carry out essential maintenance work on its downstream units, it added.

The opening stocks of HSD with refineries as of the morning of May 02 stood at 17,000 tons with Attock Refinery, 20,300 tons with National Refinery, 22,000 tons with Pakistan Refinery, 40,500 tons with PARCO, and 11,000 tons with BYCO. The stocks with PAPCO and OMCs stand at 544,000 tons, which brings the total stocks at 654,000 tons.