Govt to push cash-strapped refiners to bump up output

KARACHI: In a preemptive move to ensure fuels availability amid volatile world crude market, authorities plan to push refineries to maximise output, which officials said wouldn’t be possible for the cash-strapped industry, The News learnt on Tuesday.

Petroleum Division, Ministry of Energy, will convene a meeting with five local refineries on Thursday, March 31, 2022 in Islamabad to discuss the same, sources said.

A top executive of a local refinery told The News that on the face of it the purpose of the huddle was to convince local refineries to boost up their production.

However, he said, refineries, currently grappling with cash flow challenges, were not in a position to increase output.

The official said reportedly the government was also mulling changing duty structure on import of crude oil and high-speed diesel (HSD), which, according to him did not seem possible given the situation.

Sources in the oil sector said presently the country was holding sufficient stocks of diesel and petrol.

Pakistan currently had 23 days’ worth of petrol stocks (590,000 tonnes), while diesel (560,000 tonnes) was sufficient for 26 days.

Sources said Pakistan State Oil’s (PSO) two diesel cargoes for April were on their way. Sources said presently there was no threat of diesel shortage in the country. The government only wants to preempt any shortage because there are fears of diesel shortage in the global market, the added.

Pakistan oil sector is presently receiving price differential claim (PDC) from the government to keep the domestic prices frozen till next budget.

As per sources, during the next two weeks, the PDCs of oil marketing companies and refineries are estimated to reach Rs36.07/litre for HSD and Rs19.64/litre for petrol if the government plans to keep the oil prices at the current level.

During the first two weeks of April, the ex-depot price is predicted to reach Rs169.50/litre against Rs149.86/litre in the fortnight starting from March 16 and ending on 30th.

Furthermore, during the next fortnight that starts from April 1, the ex-depot price of HSD is figured to be Rs180.22/litre against Rs144.15/litre during this fortnight.

For the next two weeks, the PDC on LDO (light diesel oil) and kerosene oil is estimated to be Rs28.33/litre and Rs30.78/litre respectively.

The rise in the PDC is attributed to the increasing international oil prices that reached over $120/barrel on March 25, 2022.