EFFECTIVE AND EFFICIENT MANAGEMENT OF OIL IMPORT BILL THROUGH PRODUCTION OF BIODIESEL

Abstract

The depletion of the world petroleum reserves and increased environmental concerns have stimulated recent interest in alternative sources for petroleum based fuels. Biodiesel has arisen as a potential candidate for the diesel substitute due to the similarities it has with petroleum based diesel. Pakistan is a developing country with limited energy resources. The insufficient indigenous energy resources dictate import of oil to fulfill the energy needs. Consequently, a huge amount of country’s budget is taken away by oil import bill and its budget remains in deficit since decades. Country’s total energy fuel consumption during 2008-09 was 17911199 Tons (approx: 18 Million Tons). Out of which over 42% i.e. 7562882 Tons (approx: 7.5 Million Tons) of High speed Diesel (HSD) was consumed. To meet this demand 4395427 Tons (approx: 4.4 Million Tons) of HSD worth 3.862 Billion US $ were imported. In a bid to save this foreign exchange, Government of Pakistan (GoP) has launched National Biodiesel Program (NBP) to produce renewable fuel as a substitute of diesel oil from Jatropha Curcas, a non edible oil seed tree, in the waste lands of Baluchistan, Sind and Punjab. GoP has fixed target for biodiesel use, which envisages replacement of 5 percent annual diesel consumption (through blending 5% biodiesel with petro-diesel i.e. B5) by 2015; and 10 percent (through blending 10% biodiesel with petro-diesel i.e. B10) by 2025. Implementation of NBP would reduce oil import bill of the country by 1 billion US $, as perceived by the Economic Coordination Committee (ECC), but, this huge exchequer spent on oil import can only be saved by effective and efficient management through indigenous production of biodiesel. The actual financial impact on the import bill of HSD through indigenous production of biodiesel and its use in blends have been calculated considering all the agricultural, technological and economical factors. The cost effect on total oil import bill is ascertained on the basis of comparison between the import value of 1 litre HSD and the cost of indigenous production of 1 litre biodiesel. In thesis work national biodiesel program is evaluated keeping in view the calculated financial effects and the current developments made so far in the country for successive introduction of B5 and B10 in the coming years.