November 15, 2019 (MLN): The refinery sector of Pakistan has found itself in hot water yet again, considering the changes that have been made to international laws with respect to environmental sustainability.
Sharing some insight on the same, a research report by JS Global says that the International Maritime Organization (IMO) has directed marine sector to curtail their emission of Sulphur to at least 0.5% by the beginning of next year.
With all due respect to the cause and purpose of this move, it is likely that the outcome of this plan shall be devastating for Pakistan’s refinery sector. In case the sector doesn’t, or fails to comply with the new IMO policy, the relevant authorities will retort by taking serious measures, such as heavy fines, penalties, or even detainment of ships of non-complying countries.
Now here comes the worst part, if and when these changes are implemented, the price of Furnace Oil in both international as well as domestic markets will fall substantially, owing to a decline in demand. According to JS Global’s report, the price for FO in Pakistan has fallen by 33% in November alone, and might fall even further when the new IMO policy comes into action.
It goes without saying that to bring the Sulphur emission down to such level, the refinery sector will have to make some significant changes to its operations, such as installing scrubbers or by switching to Low Sulphur Furnace Oil instead of High Sulphur Furnace Oil.
The report also points out that the refinery sectors across the globe have prepared themselves enough for this inevitable change, whereas Pakistan continues to lag way behind due to its continued reliance on outdated hydro-skimming technology.
Now the good part is that there is a solution for abovementioned complications, but the bad part is that for Pakistan, this solution comes with an unaffordable cost. To successfully comply with IMO policy, Pakistan will have to invest substantially in new technology to catch up with the rest of the nations. However, looking at the current fiscal challenges of the country, it is highly unlikely that the government of Pakistan will even consider this as an issue, let alone investing a colossal amount of money into it.
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