ISLAMABAD, Oct 4: The government on Monday decided to import more than 450,000 tons of furnace oil on an emergency basis to meet any eventuality and increasing demand for thermal power production.

Official sources told Dawn that the Wapda's demand for furnace oil for power production has increased by more than three-fold owing to a drastic decline in hydel power production because of water shortage.

A meeting of all stakeholders including Wapda, Pakistan State Oil (PSO), Oil Companies Advisory Committee (OCAC), independent power producers (IPPs) and officials of the ministries of finance, petroleum and water and power noted on Monday that extraordinary situation has emerged due to shortage of power.

The total furnace oil import during the October-December period would cost the national exchequer about $100 million compared to $50 million furnace oil imports during the last whole fiscal year.

The Water and Power Development Authority had announced one-hour load shedding throughout the country last week but was averted by intervention from the minister for water and power who persuaded three major power producers to postpone their respective plant maintenance for the time being. This reduced the power shortage by about 600 mw.

The meeting on Monday directed the director general of oil to closely monitor the overall furnace oil situation in the country to face any eventuality. It also directed the PSO to make special arrangements to import 450,000 tons of furnace oil on immediate basis to meet the power demand during October to December period.

The PSO would float international tenders immediately to import the required quantity of fuel oil on competitive bidding basis. "Normally, Wapda imports around 50,000 tons of furnace oil per month during the months of September to December but the demand has increased by more than three times and expected import during the month of October could be about 200,000 tons", a senior government official said.

The increased demand for furnace oil would have a chain effect on the national economy as the electricity tariff would have to be adjusted accordingly in the coming fortnight to offset higher cost of thermal power generation.

Last week, Wapda had asked the government to take immediate steps to import 450,000 tons of furnace oil on emergency basis, and had informed this would be the minimum requirement for the October-December period.

The country's main dependence of electricity generation has been shifted from hydropower generation to thermal due to worsening situation of water availability in major reservoirs.

Hydel power generation has declined by around 60 per cent over a period of six months. Total furnace oil import had remained at around 100,000 tons during 2003-04 as better hydrological conditions enabled maximum hydropower generation.

In September, Wapda had estimated total fuel oil requirement at around 150,000 tons for the October-December period but revised 56 per cent water shortage forecasts by Indus River System Authority (IRSA) has forced Wapda to revise its estimates to 450,000 tons.

This demand does not include the furnace oil requirements for Karachi Electric Supply Corporation (KESC) whose main dependence is on fuel oil and normally maintains a stable supply arrangement. Around 350,000 tons of furnace oil is available from local refineries while the requirement may exceed to 1.5 million tons if the water situation did not improve.