Cabinet Committee on Energy: Refineries asked to look for export avenues

Committee endorses ban on furnace oil imports as country has surplus fuel

ISLAMABAD: The Cabinet Committee on Energy has asked oil refineries to look for options that can pave the way for export of furnace oil due to surplus stock.

The cabinet body also highlighted its decision of imposing ban on the import of furnace oil to encourage consumption of the oil produced by local refineries.

The decision was endorsed in a meeting of the energy committee chaired by Petroleum and Natural Resources Minister Ghulam Sarwar Khan on Wednesday.

The committee agreed to set up a task force in order to address growing concerns of local refineries. Energy expert Babar Nadeem will chair the task force which will present its recommendations.

“The task force will come up with its recommendations in next meeting of the energy committee,” said an official of the Petroleum Division.

At present, all the refineries are facing a tough time as their furnace oil inventories have accumulated. In meetings with Petroleum Division officials, representatives of the refineries informed them that if the present situation persisted, they would shut down their plants.

According to the Oil Companies Advisory Council (OCAC), the local refineries produced one million tons of furnace oil in first four months (Jul-Oct) of the current fiscal year and despite that, the oil was being imported for consumption in power plants.

Domestic refineries are producing 10,000 tons of furnace oil every day.

The energy committee suggested that oil refineries should find export avenues by themselves. However, sources in the energy sector said the government had no policy or mechanism for the export of surplus locally produced furnace oil.

The committee emphasised that in the short term oil refineries would work at full capacity, adding that power producers could assist them in oil storage for the next three months on credit. However, the refineries should upgrade their plants.

The committee decided that the merit order of power plants would not be disturbed so that consumers could be provided with economical and reliable electricity.

A standard operating procedure would be set based on demand from the Power Division and supply by Sui Northern Gas Pipelines. The standard operating procedure will be discussed in the energy committee and ratified by the cabinet.

In its periodic report submitted in the upper house of parliament on November 17, 2018, the Senate Standing Committee on Petroleum directed the Petroleum Division to carry out a cost analysis of power production through imported liquefied natural gas (LNG) and furnace oil by a modern and latest plant.

The energy committee decided that liquefied petroleum gas (LPG) prices would not be increased as it was a fuel consumed by the underprivileged. The finance ministry wanted to restore regulatory duty and general sales tax to previous levels, but the committee did not endorse the proposal.

Published in The Express Tribune, December 6^th, 2018.

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