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Electricity shortfall feared to increase

November 19, 2012

An official of the petroleum ministry said the PSO would no more supply furnace oil on credit.— File Photo

ISLAMABAD: With people already facing hours of power outages, the Pakistan State Oil has expressed its inability to provide furnace oil to the sector on credit which may cause an increase in electricity shortfall in coming weeks.

A senior official of the water and power ministry told Dawn on Sunday that loadshedding in cities like Lahore, Faisalabad and Karachi had gone up to four hours a day over the past week.

He said there had been no unannounced loadshedding anywhere for almost a month — between mid-October and the second week of November.

An official of the petroleum ministry said the PSO would no more supply furnace oil on credit.

He said the largest fuel supplier had informed the ministries of water and power and finance that it would now provide furnace oil only on advance payment and would suspend the practice of procuring the fuel from refineries on credit for supply to power plants on deferred payment.

“We cannot force PSO to increase its receivables. Why should it purchase fuel from refineries on payment and supply on credit to power plants, it increases the financing cost,” the official said.

He said the PSO had cleared almost all the outstanding arrears to local refineries.

It has to recover over Rs135 billion from the federal government on behalf of the power sector.

He said gas shortfall was anticipated to go up to 1.8 billion cubic feet per day (BCFD) because of three-fold increase in consumption in the household sector.

As a result, industrial, fertiliser and CNG sectors would suffer and may lead to a minimum of three-day weekly shutdowns.

The fuel supplier normally maintains stocks of up to 250,000 tons but has informed the government that any build-up of inventory for higher power sector demand for winter would be based on advance payment.

The power sector’s furnace oil requirement during winter increases manifold as gas supplies and hydropower generation decline.

The official said the electricity shortfall would start increasing later this week because provincial demands for irrigation would affect generation by hydropower plants.

The electricity shortfall in winter will touch its peak by Dec 25 and remain so until the end of January 2013 because of closure of dams and canals for annual maintenance and cleaning.

The hydropower generation which currently hovers at 4,000MW is estimated to come down to about 1,000MW between Dec 25 and Jan 31.

Diversion of gas from power to domestic sector for heating and cooking during the same period will severely affect the power sector which will not only require additional oil supplies but also require higher funding.

Generation from thermal plants will require an increase in electricity tariff which will be politically difficult for the government ahead of general elections.

The petroleum ministry official said the government would present to the Supreme Court two different pricing mechanisms for CNG on Monday.

He said a private firm hired by Ogra for audit of a select 11 CNG stations had proposed about Rs28 per kg charge, including Rs4.50 per kg profit margin to stations.

A technical team of Ogra has worked out the charge at Rs15 per kg. Most probably, CNG price will go up to Rs77 per kg in Potohar, Khyber Pakhtunkhwa and Balochistan and Rs68 per kg in Sindh and Punjab on the basis of Ogra calculations.

He said the CNG price could go up to about Rs85 per kg on the basis of calculations made by the private audit firm.

He said a final price would be worked out on the basis of possible instructions by the Supreme Court and hoped that it would be revised on Monday with a minimum increase of Rs15 per kg.

Since Oct 25, the CNG is being sold at Rs61.64 per kg in Potohar, KP and Balochistan and at Rs54.16 per kg in Sindh and Punjab, on the basis of an interim order of the apex court.