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Friday March 29, 2024

Govt to increase fuel storage capacity up to 45 days

By Khalid Mustafa
March 10, 2016

ISLAMABAD: The Nawaz government has started carving out a plan under which the country’s fuel storage capacity will be increased up to 45 days from existing 21 days. The strategic initiative is being taken keeping in view the recommendations proposed by ‘Armed Forces’ on the ground that country is in a state of war and its western border which is very long and porous one has become extremely vulnerable.

Being the front state against terrorism, Pakistan badly needs to upgrade oil reserves capacity up to 45 days at least. The Forces are already in the intensive fight with deadliest spate of terrorism under the Zarb-e-Azab operation in various pockets of the country, a senior official said while quoting the recommendation of the Forces. Currently under the rules, all the oil marketing companies need to maintain the fuel storage up to 21 days, but they are managing them for up to 11 - 13 days maximum  which is very alarming  development given the scenario.

The oil and gas regulatory authority in its correspondence has also asked the Ministry of Petroleum and Natural Resources to thrash out the plan for increasing the fuel storage capacity of the country, Mr Saeed Ahmad Khan, Chairman of Oil and Gas Regulatory Authority (Ogra) confirmed to The News.

The relevant officials in the ministry also confirmed the development, saying the ministry has started shaping up the plan to increase the country fuel storage capacity to 45 days.  In the wake of circular debt and inventory losses that are perpetually being incurred because of continuous tumbling of oil prices in the market, oil marketing companies are unable to maintain the existing storage of 21 days.  

The officials argued that they have to take the decisions for upgrading the storage capacity after looking into the War Book. The state owned oil marketing company—Pakistan State Oil (PSO)—which is adversely affected by the unbridled menace of circular debt as its amount of over Rs227 billion is needed to be paid off by power sector, PIA and Sui Northern, will never be able increase the fuel storage capacity for 45 days as federal government will have to arrange at least one time financing for PSO to upgrade the fuel storage capacity of the country. For mobility of military vehicles, tanks, jets and others weaponry carriers to take on enemies, strategic fuel capacity is sufficient, but the Armed Forces want the increase in country’s fuel storage capacity for 45 days as when country exposes to regular war, all  its fuel storage becomes the strategic fuel reserves automatically.

The government, the officials suggested, is needed to create Energy Fund from where the state owned PSO should be financed for increasing its oil reserves capacity for 45 days as its current financial health is not strong enough to accomplish the mission.

To a question, the officials said that almost 17 oil marketing companies are operative in Pakistan under Ogra licence. Pakistan State Oil, M/s Shell Pakistan Limited, M/s Attock Petroleum Limited, M/s Byco Pakistan Limited, M/s Admore Gas Private Limited, M/s Chevron Pakistan Limited, M/s Total-Parco Pakistan Limited, M/s Bakri Trading Co Pakistan (Pvt) Ltd, M/s Hascol Petroleum Limited, M/s Askar Oil Services (Pvt) Ltd, M/s Overseas Oil Trading Co (Pvt) Ltd, M/s Askar Oil Services (Pvt) Ltd, M/s M/s Zoom Petroleum (Pvt) Ltd, M/s Express Oil (Pvt) Ltd, M/s Gas and Oil Pakistan (Pvt) Ltd, M/s Petrosin Petroleum (Pvt) Ltd, M/s LaGuardia Petroleum Private Limited and M/s Horizon Oil Company (Pvt) Ltd, are the companies which are supposed to maintain their oil resrves for  up to the 21 days consumption, but they are not maintaining mainly because of the inventory losses.