PSO probing import of Rs2.3 billion substandard furnace oil

ISLAMABAD: The Pakistan State Oil has started an inquiry into the import of 65,000 tons of Low Sulfur Furnace Oil (LSFO) worth $23 million (Rs2.3 billion) that was not fit for power generation. This has also a spillover impact of Rs1.5 billion.
The vessel carrying the LSFO arrived at the Karachi Port on April 2, but the whole consignment was found substandard and not fit for power generation. LSFO is used for power generation and Nepra has detected many times that some powerhouses have virtually become oil guzzlers and inefficient mainly because of the substandard fuel that is being used since long. The USAID in its study detected that the mafia involved in this business earns about $400 million per year.
As the scam surfaced, Tariq Razvi, PSO’s General Manager (Supply), was suspended for importing the sub-standard LSFO. The sources, however, said that import of substandard LSFO has taken place because of the direct intervention of a group of senior officials with the contractor, excluding the concerned staff, and the GM (supply) had nothing to do with the import of LSFO. It was also learnt that the PSO staff is planning a strike against the senior officials.This correspondent tried to take the version of senior officials but none of them chose to respond.
Ms Marium Shah, spokesperson for PSO, however, confirmed the import of substandard furnace oil saying an inquiry had been initiated into the matter. She said a cargo of 65,000 Metric Tonnes (MTs) of LSFO, which arrived on 2nd April, 2015 was off-specification. However, the cargo was accepted for delivery despite the fact that the cargo had failed the load port survey. She insisted that the management was initially misled that the fuel had been on-specification at the time of its purchase and the change in specification occurred during transit. Later, the management was told that the fuel supplier was willing to meet any damages for providing the off-specification fuel. Upon identification of this deceitful and unlawful activity, PSO initiated an enquiry and had suspended the concerned official.
The cargo was purchased on Freight on Board (FOB) basis as per the Contract of Affreightment (CoA) with the Pakistan National Shipping Corporation whereby PSO is responsible for the product from the time of purchase. Therefore, the company was left with no other option but to decant the fuel. PSO is now moving the product to its Lal Pir Depot where it will be blended with additives to bring it up to specification for KAPCO at normal rates/no additional cost. The spokesman did not respond to the query about the unrest among the staff.