OMCs bet on pipelines to beat oil tanker mafia

KARACHI: Tired of the tanker operators’ supply disrupting maneuvers to get their demands met, oil marketing companies (OMCs) were eagerly waiting for early completion/upgrade of pipeline projects, which would significantly cut their dependence on road transportation, an industry official said on Tuesday.

“While further orders are awaited on the implementation of axle weight load policy that was suspended last October for one year, oil tankers continue to pose road safety hazards and degrade the country’s infrastructure,” the official said, while talking to The News.

Currently, it is estimated that around 12,000 oil tankers are engaged in the transportation of more than 60 percent of petroleum products across Pakistan. These tankers cause road congestions, accidents, pilferage, late deliveries and immense damage to the highway network due to being overloaded.

“The tanker mafia is also notorious for blackmailing tactics, such as strikes and unexpected volatility in tariff, to disrupt supplies,” the official said. According to the National Highway Authority (NHA), it alone spends around Rs65 billion every year on road maintenance.

Further, the economic cost of road crashes in Pakistan is estimated to be around 3 to 5 percent of the GDP.

It is worth noting that Pakistan is the only country in the region where heavy traffic does not comply with axle load limits set by the government. Currently, the axle load standards in Iran, India and even Afghanistan are much more stringent than the permissible limits in Pakistan.

Estimates by OGRA suggest that 85 percent of oil tankers are non-compliant with the prescribed safety standards. These safety violations have resulted in major accidents, like the Ahmedpur East tanker explosion in 2017 that led to tragic loss of more than 200 lives.

In recent years, the demand for petroleum products has been as high as 24 million tons in Pakistan, as per data from OGRA’s annual “State of the Regulated Petroleum Industry” report. The consumption is expected to witness a surge in the coming years due to higher demand from industries, CPEC projects, motor vehicle segment and domestic consumption by households.

To meet the rising demand and reduce excessive reliance on oil tankers for transportation of oil products up North, the industry and government are already working to upgrade oil pipeline projects.

These pipeline projects include the 362km Mahmoodkot-Faisalabad–Machhike (MFM) Pipeline, which was commissioned by PARCO in 1997 with an annual capacity of nearly 3.7 million tons.

Similarly, the White Oil Pipeline is owned by Pak Arab Pipeline Company Limited (PAPCO) along with Shell, PSO, and Total, with a capacity of 12 million tons per year.

As per the company, this project has reduced the movement of about 4,000 trucks operating out of Keamari to Mehmoodkot and back. According to senior officials of the Petroleum Division, dualisation of the White Oil Pipeline from Karachi to Sheikhupura for supply of petrol to oil marketing companies has been completed and will soon start operations.