ISLAMABAD, Jan 18: The state-run Pakistan State Oil hit back at the power ministry on Tuesday for holding it responsible for the current electricity crisis and wrote to the federal government assailing the move aimed at directly importing furnace oil for generation companies.
“Kapco (Kot Addu Thermal Power Company) and Genco-III of Pepco are under long-term contractual arrangement with the PSO for supply of fuel oil. The proposed arrangement would result in violation of these agreements, which could lead to legal implications,” said a letter written by PSO’s managing director Irfan Qureshi to federal secretaries of finance, water and power and petroleum and natural resources ministries.
This is the first official response from the country’s largest oil supplier over power ministry’s decision to start direct fuel imports for generation companies on deferred payments on sovereign guarantee.
The company said the procurement of fuel oil through imports was a specialised field requiring qualified and experienced human resource, expertise in procurement process through international suppliers besides having strong financials and company profile.
Pepco, which “had already made an attempt of directly importing fuel oil in the past, could not ensure availability of product and ultimately had to discontinue its import function”.
In case of failure of direct imports, restoring supply chain by the PSO would require considerable time and efforts which might lead to serious power crisis in the country, the PSO chief said.
A detailed analysis of the proposed arrangement should be undertaken and discussed with stakeholders, including the PSO, before seeking approval from the Economic Coordination Committee of the Cabinet, he added.
The company said the power companies had never been able, particularly over the past one year, to make payments to the PSO on time against fuel supplies.
Out of average monthly receipts of Rs19 billion against supplies of Rs23 billion, about Rs12-14 billion are being funded by the federal government while Pepco has been paying only Rs5-7 billion.
A PSO spokesman also refuted allegations of the water and power secretary for “too high” moisture and contaminants in the PSO’s fuel oil, saying all fuel quantities were in line with specifications and standards approved by the Hydrocarbon Development Institute of Pakistan – a state-owned organisation responsible for maintaining quality standards of all petroleum products.
He said the kind and quality of power Pepco was supplying to its consumers was evident to the nation despite this being a specialised area of its technical expertise which could not be replicated in fuel supplies. The PSO also tried to dispel an impression about short fuel supplies and said the five generation stations of Pepco at Muzaffargarh, Jamshoro, Faisalabad, Guddu and Piranghaib had sufficient fuel stocks to cover power generation for 23 days.
The spokesman said power station at Muzaffargarh had fuel stocks for 6 days, Jamshoro for 24 days, Guddu for 29 days, Piranghaib for 23 days and Faisalabad for six days. The stocks with independent power producers, he said, hovered between one and 7 days.
“Pepco’s allegations that the PSO is responsible for the power crisis in the country are based on misleading facts.”
He said PSO’s volume supplied to Pepco had been grossly understated, which was diligently and uninterruptedly supplying adequate volumes of furnace oil to the power sector on a daily basis as per the directive of the government and the ministry.
Given the adverse weather conditions, external factors and slow movement of railways, slight delays in transportation of furnace oil had been witnessed; however, the company maintained that these required levels of stocks were in transit and all necessary measures were being taken to ensure that the fuel supplies reached their destinations on time to meet the energy needs of the country, the PSO spokesman said.
It further said the PSO had strongly recommended to Pepco and other stakeholders to build their stock levels for the winters because transportation became an issue due to external factors over which PSO had no control. “Needless to mention that Pepco did not pay much heed to these recommendations earlier on.”
Ii said in addition, the amount of Rs40 billion cleared on special instructions of the prime minister was to pay off the mounting financial liabilities and outstanding amounts of the PSO. “The power sector receivables still stand at Rs120 billion while PSO’s total receivables are Rs140 billion.”