Former finance minister Miftah Ismail has called for a measured approach to Pakistan’s proposed ethanol blending policy.
He believes reducing fuel costs is important, yet policy changes must follow careful evaluation.
According to him, reviewing new energy options is positive, but rushed decisions could create long-term complications.
He emphasized that policymakers should avoid quick moves without proper economic and technical assessment.
Instead, authorities should first study feasibility and practical implementation challenges.
Such caution, he argued, helps prevent unintended market disruptions.
Why Ethanol Blending Is Being Discussed
Ethanol blending involves mixing ethanol with petrol to reduce fuel costs and dependence on imported oil.
Many countries already use this model to improve energy security and support agricultural industries.
However, Ismail stressed that each country’s economic structure differs significantly.
He explained that Pakistan must evaluate whether ethanol blending truly fits its industrial and energy framework.
Although the idea appears attractive, execution remains the real challenge.
Therefore, policymakers should analyze both benefits and risks before introducing mandates.
Sugar Industry Could Quickly Enter the Market
Ismail noted that sugar mills could rapidly join ethanol production if the sector becomes commercially viable.
This shift would provide mills with an additional revenue stream beyond sugar production.
Consequently, ethanol demand could encourage higher prices within the new market.
He added that market dynamics would largely depend on government regulations.
If authorities require oil companies to blend a fixed ethanol percentage, outcomes could vary widely.
Companies might purchase ethanol at lower prices while keeping profit margins under regulated pricing structures.
Need for Quick but Thorough Assessment
The former finance minister suggested that relevant stakeholders conduct a rapid initial review. He proposed collaboration between the Ministry of Petroleum, Pakistan State Oil, and representatives from the sugar industry. Such coordination could produce preliminary findings within days.
Afterward, policymakers could develop practical policy options based on evidence rather than assumptions. This step, he argued, would ensure informed decision-making. Moreover, early analysis could highlight operational risks before implementation begins.
Infrastructure and Implementation Challenges
Despite potential advantages, Ismail expressed doubts about immediate rollout. He pointed to infrastructure limitations as a major obstacle. Blending fuel requires specialized systems, storage facilities, and distribution adjustments.
Additionally, timelines for building such capacity remain uncertain. Without preparation, implementation could disrupt fuel supply chains. Therefore, gradual planning appears more realistic than sudden enforcement.
Economic Viability Depends on Global Oil Prices
Ismail linked ethanol’s success directly to international oil prices. He explained that ethanol blending becomes attractive when Brent crude prices exceed $100 per barrel. At moderate oil prices between $60 and $80, ethanol often loses economic competitiveness.
This price sensitivity means policy effectiveness may fluctuate with global energy markets. Hence, long-term planning must account for changing international conditions.
Lessons From International Examples
He compared Pakistan’s situation with countries that successfully adopted ethanol programs. Brazil benefits from a massive sugarcane industry where ethanol production is deeply integrated. Similarly, the United States supports ethanol through large-scale corn farming and policy incentives.
Pakistan, however, lacks comparable infrastructure and production scale. As a result, direct replication may not deliver similar outcomes. Careful adaptation remains essential.
Balancing Opportunity With Practical Reality
While current petrol prices may make ethanol blending seem financially appealing, practical barriers still exist.
Operational readiness, logistics, and market structure must align before implementation. Otherwise, expected savings may not materialize.
Ismail concluded that exploring ethanol blending is worthwhile but should proceed cautiously. Thoughtful planning, he believes, will determine whether the policy becomes a genuine energy solution or a costly experiment.
