PSO stops fuel oil imports, awaits demand from power producers

Company’s tanks are filled to the brim with no more storage capacity

ISLAMABAD: As stocks of furnace oil pile up, state-run oil marketing company Pakistan State Oil (PSO) is reluctant to import more fuel in the absence of firm demand from power producers.

A senior government official revealed that independent power producers were not consuming furnace oil in line with the demand they had floated at the time of imports.

He said furnace oil stocks had swelled in the country, but power producers were not lifting the oil according to their requirement for electricity production. “PSO’s tanks are now filled to the brim with no further capacity to store more oil,” he said.

The official pointed out that PSO managing director was facing corruption charges being investigated by the National Accountability Bureau (NAB) following hefty demurrage payments to shipping companies because the company could not lift furnace oil from cargo vessels at the port for a long period.



Owing to that, he said, PSO was careful about future imports and would not float a fresh tender until the Ministry of Energy (Power Division) gave a firm demand for fuel oil consumption in power production.

Already, PSO has revoked an oil import tender recently as suppliers could not come up with positive response. The suppliers who regretted that they would not be able to supply the commodity included PetroChina, Bakri Trading, Vitol and Gunvor and as a result the tender stood automatically scrapped.

At present, two imported fuels - furnace oil and liquefied natural gas (LNG) - are being used for power production in Pakistan. However, PSO and Pakistan LNG Limited (PLL) have not received any firm fuel demand from power producers for July. Officials were of the view that the situation could aggravate following a slowdown in fuel imports in the current month.



They revealed that PLL had also cancelled an LNG import tender because of higher prices quoted by the suppliers.

In a letter sent to the federal government, PSO conveyed that the company would not invite tenders for furnace oil import until it got firm demand from power producers.

It also conveyed that its tanks were filled to capacity and had no further space for storage as power producers were not lifting the stock as per their demand.

A PSO spokesperson told The Express Tribune “the company is waiting for firm demand from the Ministry of Energy. Based on the demand, PSO will award cargoes from floated tenders while keeping in view the high sulphur fuel oil stock levels in the country.”



According to another official, PSO’s receivables from different entities were estimated at around Rs322 billion on July 12, 2018. Of these, about Rs280 billion was to be paid by the power producers, Rs26 billion by Pakistan International Airlines and on account of price differential claims to be received from the government and Rs16 billion by Sui Northern Gas Pipelines for LNG supplies.

“PSO continues to be in touch with stakeholders for the realisation of outstanding bills,” the official said.

Published in The Express Tribune, July 15^th, 2018.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.