PARCO to export 2nd cargo of 50,000 tonnes fuel oil

KARACHI: Pak Arab Refinery Limited (PARCO) will export 50,000 tonnes of furnace oil (FO) by the end of this month, to take care of the glut, The News learnt on Tuesday.

This would be the refinery’s second export cargo during the current financial year, as it exported 50,000 tonnes of FO in the last month too.

Amidst the high stocks across the country, PARCO holds the largest stockpile of FO at above 55 percent of the total stock of fuel oil available with the local refineries.

According to people familiar with the development, PARCO has been opting to export the fuel oil in order to gain maximum in terms of foreign currency to address its issue related to payment of dividend to its foreign partner.

During the last fiscal, PARCO along with Pakistan Refinery Limited (PRL) exported a record over 264,000 tonnes of fuel oil because of refusal of power plants to lift it for power generation as it fell in the bottom of the priority list of sources for generation of electricity. As a result of the refusal, the country accumulated a huge stock of fuel last year, of which some quantity was exported by the two refineries.

However, during the current fiscal, only PARCO has exported the fuel oil so far in order to earn foreign exchange as other refineries have been selling it in the local market.

According to energy sector people, PARCO currently possesses 57 percent of the total fuel stock of the refineries followed by Pakistan Refinery Limited (PRL) having 14 percent of total stocks.

Attock Refinery Limited (ARL) possesses 12 percent of the total stock followed by National Refinery Limited (NRL) and Cnergyico Limited with 11 percent and six percent stock respectively.

Sector people said that lifting of the fuel oil by the power plants has seen some improvement in recent weeks as the heat of summer has pushed the demand of electricity higher, particularly in Punjab. Although hydropower generation has also gone up significantly, power demand is also being met with the furnace oil burning in the power plants, which improved the lifting of fuel oil from the local refineries.

The government of Pakistan has been trying to phase out fuel oil from the power generation mix to move to greener and more sustainable indigenous options. As per the Generation Capacity Expansion Plan (IGCEP) 2022-31, the total share of green energy is targeted to reach 59 percent, while FO is set to be phased out by 2031.