Fuel crisis staring in the face | Business

ISLAMABAD: Pakistan is going to face massive fuel crisis within next three days as the country’ refineries including Byco and Parco and oil marketing companies have intimated the government about halting their operations for production of POL products in next three days’ time as their storages are completely topped up with furnace oil, rather they are now brimming.

Byco with capacity of refining 1,20,000 tons of crude oil has been closed down and this has been intimated in its letter written on November 12 to secretary petroleum. Parco also wrote a letter on November 13 to secretary petroleum which is also seen by The News, saying that it has no more room for their fuel products and therefore, they are bound to cease production of petrol, diesel, and other products. The OMCs even have no more capacity to store fuel products as their storages are now brimming with furnace oil.

The oil industry says that abrupt closure of the furnace oil-based power plants has caused the storage issue for the refineries and OMCs and now they are unable to continue to produce the POL products.

Prime Minister Shahid Khaqan Abbasi on October 27, 2017 took an abrupt decision not to run the power plants on diesel and furnace oil without taking the industry in the loop. The decision was taken to avoid running the costly power plants to prevail upon the cash flow situation and to reduce adverse impact of the circular debt.

The OCAC intimidated on November 3, 2017 to the government in its correspondence also available with The News with the headline, “The ramifications of the abrupt closure of the power plants run on furnace oil” but unfortunately the Ministry of Petroleum and Natural Resources and its attached departments which were fully privy to the impending crisis, remained indifferent for many days.

However, after many days’ pause, the authorities in the ministry on getting letters from Byco and Parco, have swung into action preempting the crisis in next three days and held a meeting here on Wednesday chaired by secretary petroleum and attended by representatives of refineries, oil marketing companies and oil companies’ advisory council.

In the meeting, it was said that refineries had proposed that the government should run the efficient furnace oil-based power plants on merit so that 10,000-12000 tones per day furnace oil from local refineries could be lifted and if the power division did not show willingness, there would be no refinery in Pakistan to lift the local crude oil. As a result, the oil wells would be closed down and the gas from the wells would also be disconnected. Secretary petroleum told the participants of the meeting that he would take up the issue with Power Division for running the efficient power plants based on furnace oil.

PSO’s top man in the meeting also said that 6 ships carrying furnace oil had been arranged for the remaining days of the current month and next whole month of December. Out of six, one cargo has been staying in deep sea for the last 12 days and demurrages of $1,80,000 have so far piled up, which PSO will have to pay. “We are unable to unload the ship staying in deep sea because of non-availability of any room in our storages.”

To a question, the official said that PSO lifted 30 percent of furnace oil products by the local refineries and 70 percent by other OMCs. Now OMCs are also unable to lift the local furnace oil as its consumption in the power plants have now plummeted to zero. The official said that Pakistan imports 70 percent furnace oil and 30 percent is produced from the local refineries. Refineries have suggested that government should not import furnace oil and lift the local fuel for running the furnace oil-based power plants.

To a question, the official said that the existing six cargoes of furnace oil which PSO has already arranged will be consumed by the power plants and no more furnace oil will be imported.

Originally published in

The News

News Reporter

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