• Gap in demand-supply of electricity exceeds 5,000MW
• Addition of more gas to system, payment of pending receivables can curtail loadshedding
• Ogra denies reports of fuel shortages, oil companies report ‘ample stocks’

ISLAMABAD: Low fuel stocks and cash constraints have put authorities in the dock as power outages hit consumers across the country and panic buyers resorted to hoarding diesel ahead of an anticipated price hike, even as the regulator and the government tried to assure everyone that things were under control.

Prime Minister Shehbaz Sharif will preside over a meeting on the situation today (Tuesday), the same day as a fresh heatwave, expected to last till May 2, is predicted to sweep across the country. The wave is likely to unleash temperatures at least six to eight degrees higher than normal.

The current demand-supply gap, however, is likely to remain unchanged until May 8 and will then start improving as furnace oil and LNG cargoes become available and hydropower supply improves.

Oil cargoes have been made to wait longer for docking to give priority to diesel cargoes amid serious port constraints. At present, the peak generation hardly touches 20,000MW while even constrained demand goes beyond 25,000mw.

The gap between the demand for electricity and its supply has already exceeded 5,000MW, including 2,500MW of perpetual shortage that is conveniently applied any time to high loss areas. The power sector authorities are virtually chasing power producers for every single megawatt that could be put into the national grid so that loadshedding is cut drastically.

With more than Rs725 billion of immediate payables to all independent power producers, including those under CPEC, the power division is running from pillar to post to secure Rs150bn in upfront funds and diversion of about 110 million cubic feet per day (MMCFD) of gas from fertiliser plants in Punjab and captive power plants (CPP) for power generation.

According to an official, these two steps — 110mmcfd of gas for a few days around Eid and payment of Rs150bn on account of pending receivables from Azad Kashmir and other provincial and federal departments — could reduce loadshedding to a bearable level.

Repair of Engro’s plant affected by a recent accident was expected to be complete this week, but the Port Qasim coal power plant may not be available at least for another fortnight because of technical and fuel issues.

Efforts were in place to chip in Karot power plant’s test operations over the next couple of days.

The politicisation of purely technical issues by the mainstream political parties has been only adding fuel to the fire. While former energy minister Hammad Azhar blames the current government for loadshedding and shortage of diesel in some parts of the country, the current government, particularly Prime Minister Shehbaz Sharif, is blaming the previous government for loadshedding.

It accuses the PTI government of neither purchasing enough fuel nor ensuring maintenance of plants, resulting in non-availability of about 7000MW of power generation capacity. “Costly power generation through inefficient plants costs the nation Rs100bn per month. We are fixing it,” he said on Monday.

Advice ignored

Senior officials told Dawn that because of the financial squeeze, the authorities had been advising the previous government to go for load management in winter to save some furnace oil stocks for summer. But the advice was ignored.

Their demands for availability of gas (both local and imported) were not ensured. At one point the domestic refineries were compelled to export furnace oil at a loss to keep their units operational instead of building up stocks.

But statements by the new government about closure of 27 power plants due to fuel shortage or technical reasons only added fire to the situation even though there were genuine reasons as well for the outages.

For example, prices of coal and LNG were making new records. Hence it became impracticable for the government to pass on the burden to the consumer in full while a price freeze had been announced by the government.

“We don’t have the luxury of enough funds to keep oil and coal stocks ready and are getting no more than 650mmcfd of LNG against a demand of over 800mmcfd,” said an official. He pointed out that Prime Minister Shehbaz Sharif wanted to end loadshedding to avoid public criticism, but full supply to high-loss areas would make recoveries impossible and raise the circular debt.

All is well?

On the other hand, while the government, the regulator and the oil companies say higher than normal diesel stocks were available, demand pressure was rising at fuel stations because the harvest season is at its peak and in anticipation of a price hike following the end of fuel subsidies.

The Oil and Gas Regulatory Authority (Ogra) wrote on Monday ‘most immediate’ letters to all the six chief secretaries and the chief commissioner of Islamabad to monitor the situation through increased inspections to discourage hoarding of petroleum products, particularly diesel.

The Oil Companies Advisory Council (OCAC) — a representative body of downstream oil industry — reported that ample stocks of petrol and diesel were available thanks to the support by refineries in providing locally produced fuel products. Another factor was that oil marketing companies met volume commitments in time despite limited product availability in the international market.

APP also quoted Ogra spokesman Imran Ghaznavi as saying that sufficient quantity of diesel and petrol was available to meet consumers’ needs across the country, rejecting speculations of fuel shortage in a few pockets of Punjab.

According to the OCAC, sales of high speed diesel had soared due to the harvesting season, but arrangements were in place to meet the demand. It said cargoes carrying sufficient HSD volumes were already waiting off-port while other cargoes are expected to arrive soon.

Likewise, motor gasoline reserves are sufficient to meet the demand while additional volumes are coming in through planned imports.

Dr Nazir Abbas Zaidi, the OCAC secretary general, pointed out that due to the rising volume of imports and infrastructure constraints, there were challenges at ports, but efforts were in place to ensure fuel supplies ran smoothly.

He appealed to consumers not to pay heed to speculators and avoid “desperate bulk buying”.

In addition, Pakistan State Oil (PSO), in a statement, said it has arranged five additional high-speed diesel (HSD) cargoes from March till May 2022.

PSO said it has ample stocks available in the supply chain to meet the increasing demand. All our import cargoes are arriving smoothly as per plan, and despite the sudden pressure on PSO’s supply chain, our teams are working 24 hours to ensure we meet the nation’s fuel needs.

Aamir Shafaat Khan also contributed to this story

Published in Dawn, April 26th, 2022

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