ISLAMABAD: Filling stations and power plants have started drying up as petrol and furnace oil stocks plummeted to dangerous level mainly because of chronic circular debt coupled with falling oil prices, affecting private transport and increasing load-shedding.

The country’s total petrol stocks have dropped below 60,000 tonnes, which can only meet requirement for less than four days, while furnace oil stocks stand at 40,000 tonnes, which cannot go beyond two days of consumption if power plants are run at optimum level.

Informed sources said the fuel supply to power stations had been scaled down to 10,000 tonnes a day to stretch reduced power generation to four days but fresh supplies would not be available until Jan 25 as next fuel import was due in the last week of this month.

Consequently, power load-shedding has increased to more than 12 hours in major cities like Rawalpindi, Lahore and Multan. The oil marketing companies, including Pakistan State Oil, have also started petrol rationing but queues have started to appear due to panic buying, they said.

Running at optimum level, power plants can consume 32,000 tonnes a day, but due to financing problems they are normally averaged at 15,000-20,000 tonnes.

Speaking to Dawn, Petroleum Minister Shahid Khaqan Abbasi downplayed the situation, saying there were some issues with PSO, but they have now been resolved and petrol supply was getting normal. The situation at other marketing companies was also not as bad, he said.

Regarding furnace oil and power shortfall, he said it was a usual thing as fuel could not be supplied without payments. He said he was advocating minimum utilisation of furnace oil for power generation because it was not a wise approach to generate expensive power.

The maximum fuel supply in the recent past to power sector stood at 24,000 tonnes on the eve of Eid, and had since come down to 15,000 tonnes, he said.

He said the situation would improve in about a month, followed by further improvement when imported LNG was supplied to the power sector after March this year. He agreed that the government had to divert gas supply from the industrial sector a couple of days ago to meet higher demand in the domestic sector.

He said consumers, oil companies and dealers also postponed purchasing the product from the outlets in the last few days of December anticipating price reduction, and this led to abnormal demand and sale in the first week of January. In addition, the demand for petrol in Punjab had also gone up due to non-availability of CNG.

In the first two days of this month, petrol sales reached 40,000 tonnes a day which have now averaged down to 20,000 tonnes. Before CNG closure, petrol sales averaged 5,000 tonnes per day, the official said.

With its receivables in excess of Rs235 billion, PSO — the key oil importer — had been facing cash constraint and its letters of credit (LCs) were cancelled by banks. These receivables included Rs222bn outstanding against the power sector and Rs13bn against Pakistan International Airlines.

Zafaryab Khan, a water and power spokesman, said the government was maintaining power supply at about 10,000MW by managing some stocks at power houses.

He said the sector had not only cleared all current dues of October, November and December but also paid an additional Rs6bn-7bn. He said the ministry was trying to clear power sector’s outstanding dues.

A senior official said the PSO had been warning the government about the looming crisis for months but its alerts were not taken seriously.

He said the PSO had paid penalties for delayed payments of Rs50bn to banks for the Oct-Dec quarter, and $9 million penalties as demurrages and suppliers’ claim due to delay in shipment and LCs.

The PSO said its Rs110bn letter of credit lines had been blocked and “was left with no option but to freeze its business with the power sector once current supplies were exhausted”.

A petrol retailer in Islamabad said he was being supplied 10,000 litres daily which has now been reduced to 5,000 due to PSO’s rationing.

Published in Dawn January 14th , 2015

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