Friday November 26, 2021

PSO to opt for gallop import of furnace oil

July 07, 2020

ISLAMABAD: After lifting ban on import of furnace oil for averting power outages, Pakistan State Oil (PSO) has conveyed to Islamabad that no option left but to go ahead for gallop imports of HFSO for meeting K-Electric and other power plants requirements.

The PSO in writing informed to the federal government that they managed to provide 100,000 metric tons furnace oil to K-Electric against its demand of 120,000 metric tons. The PSO requested to the federal government for advising the domestic refineries for maximum allocation to PSO so that power sector demand including K-Electric can be fulfilled. Otherwise,

PSO will have no option but to seek permission of Ministry of Energy for Gallop Imports of High Sulphur Furnace Oil (HFSO) to meet demands to avoid any unwarranted situation of acute loadshedding in Karachi as KE had no other alternative to mitigate the expected situation.

“Keeping in view this situation, the Cabinet Committee on Energy under Minister for Planning Asad Umar approved withdrawal of ban on import of furnace oil,” said top official sources. When contacted to Chief Executive KE Moonis Alvi, he said that they were getting furnace oil from PSO on day-to-day basis in order to meet their generation demands.

However, the sources said that imported furnace oil would arrive by mid of the ongoing month. The Ministry of Power also assessed the demand of Residual Fuel Oil (RFO) for power plants. As per power position and historical trends, the daily requirement of RFO with effect from 17-6-2020 to 31-8-2020 of various thermal plants except Genco required 4,400 metric ton on per day basis and 1,500 metric ton on daily basis Low Sulphur Furnace Oil (LSFO).

The power plants such as Kapco demand for LFSO stood at 1500 MT/day, Lalpur 700 MT/per day for RFO, Pakgen 700 MT/day RFO, KEL 500 MT/Day RFO, Liberty Tech 700 MT/day RFO, NCPL 700 MT/Day RFO, NPL 600 MT/Day RFO, HUBCO Narowal 500 MT/Day RFO.

During the CCOEs meeting, it was informed that the PSO apprised that KE placed demand of 120,000, 90,000 and 90,000 metric tons for June to August 2020. Although, refineries were instructed to ensure maximum allocation to PSO but they showed their inability to provide requisite quantity of FO because Of different reasons including refineries may incur significant losses when they produced finished products due to difference in current crude price and product price.

The crude price was higher than the finished product therefore the refineries will be unable to produce with negative margins. Refineries have their own OMCs and preference were given to them. The PSO has requested to allow imports.

Keeping in view the whole situation, PSO may be allowed to import two firms cargoes and one optional cargo of furnace oil (HFSO) with deficit quantity up to 65,000 MT each on C&F basis through a Gallop tender.

The private IPPs may be allowed to import RFO through PSO or other OMCs after getting No Objection Certificate (NOC) from Ministry of Power to ensure all local RFO is consumed first keeping in view demand and supply situation.