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March 8, 2018

All refineries allowed exporting surplus furnace oil


March 8, 2018

Islamabad: In a new development, all the national oil refineries have been allowed to export furnace oil which got stuck up in their storages in abundance because of the government’s sudden decision taken in October 27, 2017 to impose ban on use of furnace oil in power houses and utilising the imported RLNG as fuel for power generation, “So much so, the Petroleum Division has also officially informed the state-owned Pakistan State Oil (PSO) about the decision of exporting surplus furnace oil by oil refineries,” reveals a letter of Directorate General Oil addressed to the Oil Companies Advisory Council (OCAC).

In the wake of decision of cabinet meeting on energy with Prime Minister Shahid Khaqan Abbasi in the chair in October, 2017, the PSO intimated the government that it will import no more furnace oil for power generation as powers houses will use RLNG as fuel.

It was also decided that in future if there is any need to import furnace oil, the Ministry of Energy will place a firm demand with the PSO 60-75 days in advance to arrange the fuel. The abrupt decision was primarily taken not to run the power plants on diesel and furnace oil without taking the industry in the loop. That decision was taken to reduce adverse impact of circular debt. The said sudden decision exposed the refineries to a crisis as the furnace oil being produced by them got stuck up in their storages as the government had slapped the ban on the utilisation of the furnace oil in the power generation companies. Since the storages were filled with the furnace oil and the refineries were unable to make other oil products including motor gasoline, diesel and jet fuel, the PSO had to increase its imports of petrol to cater to the needs of the country.

“Now, the government has permitted all the refineries to export furnace oil but after meeting local requirements. It is a standby arrangement under which if refineries have surplus furnace oil, they will be able to export it,” a senior relevant office told The News.

A copy of the letter written on March 2, which is also in possession of The News, says under the subject of export of furnace oil by oil refineries, it is conveyed to all the stakeholders after getting the feedback from Commerce Ministry and Federal Board of Revenue that oil refiners can export the surplus furnace oil in accordance with the provisions of the Export Policy Order notified by the Commerce Ministry and the relevant provision of the Customs Act 1969.

However, export volumes and schedules will be determined in the monthly product review meetings after analysing overall demand-supply scenario. The letter about the decision is also copied to the Pak-Arab Refinery, National Refinery, Pakistan Refinery, Byco Petroleum Refinery, Attock Refinery Limited and secretaries of Power Division and Petroleum Division, respectively.

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