Oil refineries in Pakistan have expressed concern over the current pricing formula for jet fuel and have asked the government to revise the fuel price of Jet Propellant-8 (JP-8) and increase it by Rs. 1.42 per liter.
Jet propellant 8 (JP-8) is a kerosene-based fuel containing several hundred hydrocarbons and used in a variety of military vehicles, including aircrafts. It has been used by the armed forces of Pakistan since 2005 when they switched from JP-4 to JP-8, to come at par with the international standard of jet fuel.
When oil refineries in Pakistan kicked off JP-8 production, they were given a price that equaled the price of Kerosene oil before a new pricing formula was developed. But now, Kerosene oil is upgraded with certain other special additions like anti-icing and corrosion inhibitor. The oil refineries are seeking a change in the formula so that it becomes economically feasible for them to mass produce it.
Oil refineries have suggested that the government should use the rate of JP-1 instead of Kerosene oil in order to devise the new pricing formula. Ex-refinery price of Kerosene oil is calculated at Rs. 39.62 per liter, while JP-1 is calculated at Rs. 41.03 per liter.
Oil refineries believe that the change in the pricing formula will encourage them to go for maximum production of the jet fuel. The demand for JP-8 has also increased in the recent years with increased spending on defense sector in the country. Another reason pointed out by refineries was that JP-8 storage requires special arrangement and thus the prices need to be increased.
A summary has already been sent to Planning Commission, OGRA, Finance Ministry and others for comments after which it will be sent for approval to ECC. The Ministry of Energy has affirmed the stance of oil refineries saying that JP-8 jet fuel should be linked with JP-1 and not with Kerosene oil anymore.