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The importance of lubricants.

Lubricants constitute a basic and fundamental necessity for the proper operation and maintenance of any mechanical system in general and automobiles in particular. The main function of lubricants is to decrease friction between various parts of a mechanical system having relative motion. But additionally, lubricants provide several other benefits to the system such as cooling, scavenging, improved load factor decreased wear and the tear and ecological control etc.

Depending upon the design parameters of the system, various grades of lubricants are produced by blending selected additives with lube base oils of different viscosity to render a homogeneous mixture - needed for particular demands. In automobiles, since the starting and cruising conditions variate, and in long journeys even the climatic spectrum may cover from hot and humid to chilling cold, the operating requirements of lubricants may become more exacting than otherwise in fixed machine systems.

This 'liquid gold' in the engine fold of an automobile has many similarities with the blood system in the human beings. Incidence of high blood pressure or low blood pressure in any person causes immediate deep concern to his health, and his body-system demands timely corrective measures. But do we have even a fraction of that concern for the health of our automobiles? Are we selecting appropriate lubricants for the engine and gear system? Indeed, lubricants are the life line of automobiles.

Luckily, the present government, in line with other industrial reforms, has adopted a liberal Petroleum Policy by deregulating the uncalled for strings and removing price controls on lubricants. However, these positive steps are in jeopardy due to the presence of fake oil operators spread all over the country. They skim used black oils through their so-called reclamation kit and re-fill in popular brand tins.

Pakistan got its first lube refinery, NRL, in 1966, with a capacity of 75,000 of lube base oils production per annum. Over the years the improvement in design raised its production to over 85,000 tons per annum. In 1985, the expansion unit added another 100,000 tons of lube base oil to meet the deficit imports at that time. At the growth rate of 5 per cent in lube demand, the present capacity of 185,000 tons would stand exhausted and the country is already once again on deficit import position.

Over the decade the government sanctioned as many as seven reclamation plants to recycle the used oils. While keeping a reservation on the quality of their product, their production performance has been extremely poor. Unconfirmed statistics show an overall production from all such plants at 10,000 tons per annum. Considering the current lubricants consumption at 180,000 tons per annum in the country and that 50 per cent is lost due to unawareness improper recovery system etc., at least 90,000 tons should have been channelized through these reclamation plants. But they have an overall production of 10,000 tons per annum only as against their sanctioned capacity of 40,000 tons. So where does the remaining 80,000 tons go?

One answer is that this huge quantity of 80,000 tons is illegally, and unscientifically skimmed by the aforementioned 'fake oil operators'. Thus together they enjoy about 30 per cent of the market through refilling in popular brand tins and drums. Individual car owners may not bother about used oil from their vehicles but the fleet operators, garage managers and bulk users of lubricants do get reasonable good returns of the used oils, therefore, recovery rate of 50 per cent is a conservative estimate. One really wonder show these reclamation plants have survived with such poor performance unless of course they had other supporting business activities.

It may be suggested that availability of fresh lubricants is connected with the return of at least 50 per cent used oils by the lubricant users, individuals, garage operators and industrial units. The used oil may be collected through the network of over 2,000 petrol pumps and service stations spread all over the country. Thus the collected stock should be available on the basis of geographical vicinity to the reclamation plants which may be considered as mini-refineries.

In order to encourage their interests, the reclamation plants may be exempted from all regulatory duties and taxes for a reasonable period, say 10 years, so that they could use surplus for the development of their facilities. In order to control their quality as per international specifications they should not be allowed to market their products directly but offer the reclaimed base oils to the oil marketing and lube blending companies. Certainly 50 per cent of the present lube oil consumption is reclaimed, this 90,000 tons available base oils will save at the current rate a sum of Rs. 1 billion in foreign exchange. It may also fetch another Rs. 1 billion in terms of central excise duty, development surcharge and sales tax to the national exchequer.

Additionally it will save an estimated Rs. 2 billion otherwise lost due to additional wear and tear of automobiles, plants and equipment. In a nut-shell this scheme can give benefits to the extent of Rs. 4 billion. In any case, the overall health of the machine systems specially automobiles is gravely endangered at a huge cost of foreign exchange. But more and more is desired through the cooperation and activated efforts of all concerned and perhaps some stringent legislation against the 'fake oil operators' is the need of the day.
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Title Annotation:Special Section: Energy; Pakistan's lubricants industry
Author:Jalil, Tasneem
Publication:Economic Review
Article Type:Industry Overview
Date:Jun 1, 1993
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