January 18, 2002	Friday	Ziqa'ad 3, 1422

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ISLAMABAD, Jan 17: The Pakistan State Oil (PSO) has lodged a strong protest with the federal government, saying Wapda has created imbalance in its fuel oil volumes and business operations.

The dispute between oil giant PSO and power utility Wapda has apparently called into question the government’s petroleum sector deregulation as Wapda blames the government of introducing “one-sided and farce deregulation practices,” official sources in the petroleum ministry and Wapda confirmed to Dawn.

Wapda, which has been buying furnace oil ranging from 100,000 to 150,000 tonnes every month, reduced purchases from PSO to a meagre 15,000 tonnes to 20,000 tonnes in the recent months and instead switched over to Shell Pakistan.

Last month, Wapda’s hydel power production almost stopped besides reduction in gas supplies in the recent days but its furnace oil requirement rose to around 200,000 tonnes amounting to around roughly Rs2 billion every month. This clearly shifted a big business of around Rs1.2 to Rs1.6 billion from PSO to Shell.

In a letter to the petroleum ministry, the PSO managing director protested over the situation, saying that Wapda was damaging a long-term supply arrangement and agreement with the PSO. The PSO MD was more infuriated over the fact that Wapda was making cash payments to Shell for fuel supply but it did not clear big PSO arrears.

Wapda sources, however, said after the government’s deregulation, it was not bound under any agreement to purchase exclusively from the PSO at whatever rates it unilaterally charged. Instead, it was free to go for alternate sources that it found economical.

Wapda sources said that fuel oil prices varied from time to time and the differential between Shell and PSO at one stage amounted to Rs92 per tonne. Wapda said now the PSO had come to terms and currently its prices were lower than the Shell.

“We are the biggest customer of the PSO but it was not treating us like that. We have now shattered its monopoly,” a senior Wapda official said.

He said the government’s deregulation policy was one-sided as it practically blocked Wapda to import fuel oil through Keamari. “As soon as we started importing fuel through Keamari, that was around Rs300 per tonne cheaper than that of the PSO, the federal government imposed a tax of $4.8 per tonne on Keamari port product that eroded its differential against the PSO,” he said.

He explained that, in fact, Fauji Terminal Company (Fotco) had a long-term agreement with the PSO for the import of around 4 millions of fuel every year at fixed charges of $4.8 per tonne. The PSO had to pay these charges even if fuel import is lower than the commitment.

Wapda ran from pil