High furnace oil price to push up power tariff

An increase in the price of furnace oil will lead to a rise in the electricity tariff.

KARACHI: The Karachi Electric Supply Company (KESC) has warned that recent increases in the price of furnace oil will drive up electricity tariff that consumers are subjected to.

A press release issued on Tuesday said that rates for both domestically produced furnace oil as well as imports have risen sharply in recent days.

Furnace oil price stood at Rs56,209 per ton on March 1, compared with Rs42,352 per ton in March 2010, representing an increase of 33 per cent over the last 12 months. A 10 per cent increase in price of furnace oil from current levels, will result in an increase in average consumer tariff by 73 paisas per unit.

Speaking to The Express Tribune, a spokesperson for KESC said, “Supply of gas to KESC has been far below the level pledged to the company by Sui Southern Gas Company.” He pointed out that the electricity provider is receiving a significantly lower gas supply than the required 276 million cubic feet per day.

“Since supply of gas is severely limited, the company has had to rely heavily on the use of furnace oil to generate power,” said the official. “Now with an increase in the price of furnace oil and reduced supply of gas, the electricity tariff will rise and hit both the domestic and industrial consumers,” he added.

KESC has called on the government to ensure that the gas supply is increased so that the gap in demand and supply of fuel is reduced and the company can lessen its dependence on furnace oil.

Published in The Express Tribune, March 2^nd, 2011.