Decrease in furnace oil import to affect power generation

ISLAMABAD: Owing to the monster of circular debt and default faced by state-run PSO, the country’s ability to import the furnace oil for generating electricity has nose-dived by almost one-third during the first half (July-December) period of the current fiscal year, The News has learnt.
This is going to cause a major blow to the country’s capacity for generating electricity, said the official sources while sharing the import data of furnace oil with this scribe here on Wednesday.
In December 2014, the country’s import of furnace oil decreased by 37 percent as it stands at 253,000 tons in December 2014 against 398,000 tons during the same month of the last financial year. This will now result in severe outages in the days ahead after the refusal of PSO to import fuel for generating electricity without advance money.
“Instead of blaming the bureaucrats or Ogra and making PSO as the scapegoat for failing to meet the country’s requirements, this is the monster of circular debt that has choked the ability of PSO to import the furnace oil which witnessed a decline by around 27 percent during the last three month (July-Oct) period of the current financial year,” said the official sources.
The share of dependence on imported furnace oil stands at 70 percent while 30 percent was acquired through domestic sources. In import of furnace oil, 75 percent fuel is imported by PSO.
Now the letter of credits (LCs) of PSO faced default from banks after which the crisis on petrol was triggered but now the electricity situation would worsen keeping in view the import data of furnace oil.
According to the data of Oil Companies Advisory Council (OCAC), the import of furnace oil in July this year stood at 757,000 tons, August 748,000 tons, September 598,000 tons, October 479,000 tons, November 268,000 tons and December 253,000 tons.“In totality, the import of furnace oil decreased by 30 percent, indicating that the supply of electricity will be hit severely as its fuel was not imported sufficiently,” added the sources.
This scribe contacted top officials of the Finance Division for seeking their comments on the emerging situation on Wednesday, they said that they were waiting for the outcome of the inquiry committee, constituted by Prime Minister Nawaz Sharif. If the inquiry committee concluded that this crisis was triggered because of fiscal constraints being faced by PSO, then the Finance Ministry would explore options to overcome the woes of PSO.
“If the need arises, then the government can arrange loans for PSO or any other option can also be explored to overcome the financial woes but all this can be done after getting a clear picture from the finding of the inquiry committee,” they concluded.