SINGAPORE, March 25: Pakistan has returned to importing fuel oil via tender after an absence of about eight months as low stocks and dry weather sparked demand from power producers suffering a shortage of hydropower.

Industry sources said on Thursday that Pakistan State Oil had issued a tender to import up to 220,000 tons of 180-centistoke (cst), high sulphur fuel oil (HSFO) for delivery from April through June.

"The lack of hydropower is one of the reasons PSO has had to get back into the business of importing fuel oil," said an industry source based in Karachi. The tender came despite a forecast by Pakistan's petroleum secretary late last year that the country's fuel oil imports would fall 80 per cent to one million tons in the fiscal year to May and, in the fiscal year beginning in June, be reduced to zero.

The tender, which closes on March 31, seeks two 55,000-ton cargoes of 3.5 per cent sulphur fuel oil - one for delivery from April 15-17 and one for April 24-26.

It also seeks offers of two optional cargoes of the same size for delivery from May through June, said the source, asking not to be identified. Offers will remain valid until April 3, he said.

Fuel oil is facing increased competition from natural gas supplied to the domestic market by Sui Southern Gas Company Ltd and Sui Northern Gas Company Ltd.

In October, the state utility, Water and Power Development Authority, scrapped plans to import a one-year supply of fuel oil due to ample stocks and high reservoir levels for hydropower.

But even as Pakistan's power providers try to switch from fuel oil to cheaper natural gas, attempts by the country's refiners to sell excess fuel oil overseas has proved difficult.

Last month, Pakistan's National Refinery Ltd cancelled what would have been its first export tender in 20 years, citing increased domestic demand. -Reuters