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Business

December 29, 2017

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Govt restricts furnace oil imports; fresh cargoes need prior approval

Govt restricts furnace oil imports; fresh cargoes need prior approval

ISLAMABAD: The government on Thursday decided to restrict the import of fuel oil to save foreign currency reserves and consignments of furnace oil, in future, would be conditional to the approval from the cabinet committee on energy.

The decision was taken at a meeting chaired by the Prime Minister Shahid Khaqan Abbasi to review issues related to furnace oil and petroleum, a statement said.

Minister for power Awais Ahmed Leghari, secretaries of finance, power and petroleum divisions, PSO MD, and senior officers of departments concerned attended the meeting.

“The meeting, while taking stock of the existing storage, production capacities of the local refineries and consumption, decided to restrict import orders for the furnace oil,” it added.

“Future import of furnace oil would be conditional to the approval from the Cabinet Committee on Energy … this would help reduce the import bill besides ensuring optimal operationalisation of LNG-based power plants.”

Government has already banned new power plants based on furnace oil in the wake of a growing import of comparatively inexpensive liquefied natural gas (LNG). The country has currently two LNG terminals with a production capacity of 1.2 billion cubic feet/day, which is quite a relief in the face of a gas shortfall of around two billion cubic feet/day. The government sees Pakistan could become one of the world’s top-five buyers of LNG with imports topping 30 million tonnes by 2022, up from just 4.5 million tonnes currently.

State-run Pakistan State Oil (PSO), earlier this month suspended imports of fuel oil after a drop in domestic demand as the country turns to LNG to fuel its power sector. PSO’s fuel oil sales were down 9.4 percent in the third quarter of this year from the same period last year while its LNG sales grew by nearly 50 percent due to higher utilisation of LNG in the power sector.

Presently, gas-combusted power plants produce half of electricity, followed by 20 percent from hydropower.

The prime minister also directed relevant ministers to ensure maintenance of required stocks of furnace oil to meet any emergent situation.

“The meeting also reviewed availability and consumption of gas by the power sector,” the statement said Discussing the issue of circular debt, resulting from inefficiencies in transmission, distribution and recovery process of the DISCOs, the prime minister directed that special attention should be paid towards overhauling the system to avoid administrative losses and to find a permanent solution to the issue.

“Simultaneously, a high level committee would be constituted to find solutions to the existing issue,” the statement added. The committee would be headed by the minister for power and would include representatives of ministry of finance, power and petroleum divisions.

Minister Leghari also briefed the prime minister about steps being taken towards streamlining the process of new electricity connections to the consumers. “By January 15, 2018, all pending applications, which stood around 800,000 during the past few months, would be disposed of,” the statement quoted the minister as saying.

Leghari said a system was also being developed to ensure provision of electricity connections to consumers within 15 days of application.

He also briefed the meeting about various other steps that have been taken to improve the performance of various attached departments of the ministry.

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