Hammad, Miftah spar over use of furnace oil for power generation

ISLAMABAD: Minister for Energy Hammad Azhar and former finance minister Miftah Ismail on Sunday sparred on Twitter over the use of furnace oil for power generation. It all began when Azhar tweeted a thread to "clarify some misconceptions" on the status of operations in the country’s refineries and the use of furnace oil.

The energy minister said that this summer Pakistan faced a "moderate shortage" of furnace oil as furnace oil power plants ran more than last year, attributing it to a merit order that ranks available sources of energy in ascending order of costs associated. He said furnace oil had to be relied on due to low water levels in dams. Consequently, furnace oil consumption was 116% higher.

He went on to state that for winter, 200,000 tonnes of furnace oil has been imported due to three reasons: a higher demand projection, risks of further default by LNG cargoes and low stock levels at independent power producers.

Azhar said that fortunately, during the November-December period, no defaults of LNG cargoes were experienced and so with LNG supply intact, furnace oil plants did not need to run.

The minister continued to say that furnace oil plants are indeed running again currently but that is because of lowering flows from dams as canals have been closed (an annual activity usually done for maintenance purposes). He said that in a couple of days, these plants will be consuming 13,000 tonnes per day of furnace oil. "Local refineries produce only half that volume and IPP stock levels are still below the required levels," he added.

He assured readers that the country is "well stocked on furnace oil" in case any further LNG cargo defaults are experienced.

Meanwhile, the surplus of furnace oil at some refineries is being given to IPPs whose furnace oil consumption “is already above 6,000 tonnes per day”. Azhar also said that a "new refinery policy" is being finalised to shift refineries away from furnace oil production.

Miftah Ismail, responding to the thread, said he would like to "add some info". He said that two refineries are currently shut down "because they don't have space to store furnace oil" and one is trying to "export" the fuel.

“And yet Pakistan State Oil, on government instructions, is importing furnace oil. This seems like miscoordination, no?” he asked. The former finance minister said that the energy ministry produced "1,223 million kWh power with furnace oil in October”, saying it was “695% above” the level produced in October last year.

Ismail also drew attention to the gas and LNG shortage across Pakistan. "Homes have no gas to cook or heat water and factories are shut because of no gas," he said. “This is PTI’s fourth winter. Who do you reckon is responsible?” he demanded to know.

Azhar shot back by saying that the two refineries, which shut down due to lack of storage for furnace oil, became full because there was no need to run furnace oil plants. He reminded the PML-N stalwart that LNG deliveries had been "better than expected" in November-December, quoting an 80% retainage.

“Had it not been so you would have been tweeting about bad LNG delivery cargos and thus the need to run expensive furnace oil plants," the minister said. He explained that the percentage rise in the use of furnace oil this year "seems big because of a low base effect from last year", and insisted that the levels are "still four times [lower]" than what the PML-N government used and still abide by the merit order of energy sources.

He ended by referring to an attached screenshot of Ismail's fellow party member Khawaja Asif which said that when Pakistan faced an extreme gas shortage from 2009 to 2016, at that time too, in Sindh and especially in Karachi, the supply of gas to industries was better than to other consumers. "Reasons for gas shortfall in winter are identical to gas shortfalls your government faced each winter," Azhar told Ismail, asking him to refer to Asif's tweet.