Ban on furnace oil import lifted to meet power demand

The Newspaper's Staff Reporter Published July 2, 2020

CCoE has allowed state-run PSO to import around 195,000 tonnes of furnace oil. — AFP/File

ISLAMABAD: The government has formally lifted a ban on import of furnace oil to meet peak electricity demand in the country, including Karachi, and asked at least seven oil companies to make arrangements for its import.

The decision was reportedly taken at a meeting of the Cabinet Committee on Energy (CCoE) headed by Planning and Development Minister Asad Umar early this week. The committee had imposed the ban on import of furnace oil in January last year to facilitate local refineries to exhaust their stocks. It was later given a one-time extension in April.

According to a notification issued by the petroleum division on Wednesday, the CCoE had allowed the state-run Pakistan State Oil (PSO) to import around 195,000 tonnes of furnace oil. The import was allowed on a summary moved by the petroleum division on the demand of the power division. A petroleum division official told Dawn that about 260,000 tonnes of furnace oil was already available in the country as of July 1, 2020.

The petroleum division said that under the CCoE decision, the PSO had been allowed import of two firm cargoes and one optional cargo of furnace oil (HSFO) with deficit quantity of up to 65,000 tonnes each on a C&F (cost-and-freight) basis through a gallop tender. It said the committee had also allowed private IPPs (independent power producers) to import furnace oil through the PSO or other OMCs (oil marketing companies) after getting a no-objection certificate (NOC) from the power division, which shall consult with the petroleum division to ensure all local RFO (residual fuel oil) is consumed first keeping in view the demand and supply situation.

In compliance with the CCoE decision, sources said, the power division had requested the petroleum division for facilitation of furnace oil imports by the IPPs and OMCs — Be Energy, Attock Petroleum, Hascol Petroleum, Oilco Petroleum and Fossil Energy.

However, the petroleum division has on its own notified that the power division should issue NOC only to the respective IPPs for arranging HSFO import through the OMC of their own choice so that uninterrupted supplies of furnace oil to the IPPs or general trade sector could be ensured.

It has also asked the power division to direct power plants and IPPs to maintain their stocks of furnace oil as per their respective power purchase agreements so that inventory issues with refineries could be avoided and their sustainable operations are ensured.

Published in Dawn, July 2nd, 2020

Follow Dawn Business on X, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Business

KE attributes prolonged power outages in metropolis to shortage of furnace oil

International restrictions blamed for lower oil production

Petroleum imports fall 33pc in March

Chacha Chaudhary

Jul 02, 2020 10:16am

Imported from India?

Recommend 0

Untrack

Jul 02, 2020 10:21am

The whole reason to start LNG import was to eliminate furnace oil use which is more costly and environmentally unsafe along with being inefficient vs LNG. Furnace oil mafia has make a comeback.

Recommend 0

Ayubi

Jul 02, 2020 11:27am

Great decision

Recommend 0

Jul 02, 2020 11:36am

I am Africa these days even Here most of the countries had banned FO to use in Boilers. Emissions from burning FO as fuel are most toxin then anything else (except few Plastic polymers). Please clean the air dont destroy environment all living things breath in it. Very Very bad decision.

Recommend 0

SHAHID SATTAR

Jul 02, 2020 12:12pm

Incompetence at its best. Who benefits from the delays caused in purchasing this and other petroleum products when the prices were at their lowest? Or is this deal a drama to benefit those who invested in the same when the prices were down and are selling these now to the buyers in this country for a windfall at the costs to the nation?

Recommend 0

Haroon Rashid

Jul 02, 2020 12:15pm

Good gesture from the GOP, Power Div., to keep our lights lit. We are grateful to the GOP. Now comes the DISCOS, KE. The WHO in a survey categorised Karachi as the most polluted city, cause automobiles, and the Power Generation thru Furnace Oil. I suggest Pakistan has enough reserves of Natural Gas i.e., SUI field gas that's powering our stations. If the Power Division, rationalise the Natural Gas of Sui to a cost of Sui field gas to DISCOS to provide clean fuel, @ the least cost to the power companies in Pakistan. We have KANUP in Karachi which could enhance its output to new licensees of Electricity in Karachi which will be the best if the Government considers it safe in the interest of the consumer and the country. Please get rid of the Dam Monopoly. KE.

Recommend 0

ali

Jul 02, 2020 01:37pm

we will judge based on load levels of hubco,kapco,epql. If their load level is 50 percent means gov lied and turned off power plants to save money.

Recommend 0

Syed A. Mateen

Jul 02, 2020 09:35pm

No government in the country will ever be able to take timely decision whether it is a matter of import of furnace oil or some other matter. Though KE told to relevant quarters about status of its stored furnace oil long time back but concerned authorities did not took timely action resulting in massive load-shedding in Karachi due to shortage of furnace oil with KE. While coronavirus is taking lives of people every day, no beds are available in government run, private hospitals and at quarantine centres, affected people of coronavirus was advised by government to quarantine themselves at their residences. During this period, people also faced artificial shortage of petrol, some coronavirus patients despite having small generators could not use it due to non-availability of petrol to run generators. No one can imagine that how people would have been spending their days and nights without electricity at the peak of summer season, but authorities were sleeping on furnace oil issue.

Recommend 0