ISLAMABAD, Nov 1: The petroleum ministry has devised a new mechanism to overcome issues between the power sector, the PSO and the finance ministry over pricing and quantity of furnace oil.

In a letter to the finance minister and the minister for water and power, the petroleum minister, Dr Asim Hussain has spelled out details about the new furnace oil supply mechanism.

“The system requires public sector Gencos, Kapco and Hubco to send their indents with acceptable price for supply of oil by PSO through the ministry of water and power, duly endorsed by the finance ministry,” the letter said.

Dr Asim Hussain said the price of furnace had been a bone of contention between stake-holders in the past and that is mainly because prices keep on changing.

The letter also recommended the ministry of water and power to direct the power generation companies to initiate a tendering process too, as it would remove doubts about competitiveness of prices.

“We require 45 days notice of indent to order furnace oil and the ministry of water and power needed to provide storage facility for furnace oil,” the letter said.

The petroleum minister also pointed out that indent for furnace oil on a daily basis was not reasonable and it was based on short-term and immediate term basis.

“We need a system to ensure supplies and to make timely payments to international suppliers,” Dr Asim Hussain said.

Talking to Dawn, the minister said that efforts were being made to avoid serious financial burden on PSO.

However, in an earlier meeting last week the ministry of water and power had expressed discomfort with the suggestions to alter the current ongoing arrangement.

Meanwhile, an official of the ministry of water and power acknowledged that the PSO was supplying around 15,000 tons of furnace oil to Gencos on a daily basis, which has resulted in reduction of load-shedding in the country.

Currently, peak electricity demand in the country was 13,797 MW, whereas generation was around 11,653 MW, as a result system was facing 2,144 MW shortfall, which is very low compared to the previous months.

However, the pricing issue was more related with release of subsidy amount by the finance ministry.

“We are not in a position to float tenders for supply of furnace oil due to weak financial condition,” the official said.

It was a complicated matter and as long subsidy amounts are not released regularly, power generation companies would not be in a apposition to purchase furnace oil in time.