ISLAMABAD, Dec 31: The electricity shortage that currently fluctuates between 1,000 and 3,000 megawatts is likely to worsen in a few days because of problems of transporting furnace oil and diesel through the railway system and other means.
Petroleum Ministry sources told Dawn that Pakistan State Oil (PSO) has sought federal government’s permission to invoke force majeure clauses of its fuel supply agreements (FSAs) with independent power producers (IPPs) because of its inability to meet fuel requirements because damage caused to railway tracks and fuel-carrying bogies was much more than originally believed.
Force majeure clauses in FSAs and power purchase agreements allow suppliers to announce in advance that they would not meet contractual obligations because of natural calamities or conditions beyond their control.
“Availability is not a problem, all products are now in abundance but storage and movement (of oil products) is a serious dilemma,” said a senior official.
PSO sources also confirmed that force majeure notices had been communicated to all independent power producers as a protective measure because a default in supply contract attracts large financial penalties that could also be a problem for the government which guaranteed these agreements. These notices would enable IPPs to serve similar notices to power companies, but hopefully the situation would improve a crisis situation averted. The sources said that the PSO supplied more than 40,000 tons of fuel to power companies every fortnight through train but problems were also being faced in the pipeline system. The problem was compounded by non-availability of tanker lorries, the PSO sources said, adding the force majeure notices would avoid imposition of financial penalties.
The sources said that the PSO had written to the government that the railway authorities had informed them that they would not be in a position to repair the damaged infrastructure in less than 20 days, hence it would not be possible for the PSO to meet its contractual obligations.
The sources, however, said the secretary petroleum was working in coordination with the ministry of defence to make alternate arrangements, including engaging the National Logistics Cell and even the private sector because of the limited capacity of NLC.
The sources said prolonged disruption in the movement of fuel oil could also lead to shortage of other products because of 20-25 per cent reduction in capacity utilisation of refineries.
Since the uplift of fuel oil and diesel stocks and their transportation emerged as the real problem, the storage capacity of refineries was filled to the brim. As a result, they had reduced their refining capacity that could eventually lead to shortages of products in the market.
Munawar A. Baseer, managing director of Pakistan Electric Power Company (Pepco) which looks after corporate generation and distribution companies formerly run by Wapda, told Dawn that fuel shortage was a concern but not a crisis.
He said that public sector generation companies had enough fuel for about 20 days.