SINGAPORE, Sept 30: Pakistan is expected to increase its fuel oil imports by 25 per cent in the financial year 2005-06 as the country’s robust growth is increasing demand for power, industry sources said on Friday.

Pakistan State Oil, the nation’s top oil marketing firm, is expected to import up to one million tons of fuel oil in the year to July 2006, up from 800,000 tons in the previous financial year, a company source said.

“We have alternative sources of power generation like hydro-electric power but with weather and climate conditions being unpredictable, fuel oil powered plants remain the most reliable means of power generation in the country,” the source said.

Pakistan usually imports two monthly fuel oil cargoes, each of around 55,000 tons. Traders who frequently participate in PSO import tenders said they would not be surprised to see it import additional 2-3 cargoes more each month until July.

“They have invested and planned for alternative power generation projects, which haven’t quite been successful, and that is why they continue to rely heavily on fuel oil for power generation needs,” a Middle East-based senior trader said.

In its most recent tender for September-October delivery, PSO sought to import a total of four cargoes totalling 220,000 tons of high sulphur fuel oil. The state oil company is believed to have purchased a total of three cargoes totalling 190,000 tons.

Pakistan’s voracious appetite for power has attracted the attention of Chinese trading houses.

“We are exploring doing business in Pakistan, considering their demand is just ballooning — this is one of the fastest growing fuel oil importers in terms of growth on an annual basis, and we want to tap into that market,” a Chinese trader said.

In July, PSO reported a 30 per cent increase in fuel oil sales as delayed monsoon rains hit hydro-power output.

Pakistan’s total power generation capacity in 2004 was estimated at around 20,000 mw, of which 39 per cent was fuelled by fuel oil, 30 per cent by gas and 29 per cent by hydroelectric power.

Power demand for 2005 was estimated to be around 15,000-16,000 mw, about 858 mw higher than the previous year.

Private Power and Infrastructure Board managing director Zafar Ali Khan said earlier this year the country was likely to face a power shortfall in 2006, and this could grow significantly, to about 5,529 mw in 2010.—Reuters