Furnace oil prices drop Rs1,030 per ton

Pakistan State Oil (PSO) has reduced furnace oil prices by Rs1,030 per ton, down 2.2 per cent to reach Rs46,226.

Earlier, some two weeks ago, furnace oil prices were slashed by around Rs3,000.

A PSO official said that the reduction in furnace oil prices has been due to a decline in international oil prices.

“The decline in furnace oil prices will reduce the cost of power generation, if not power rates,” the official added.

Oil is the top commodity being used for power generation in the country, and gas and hydel means come after that.

Analysts say that the decline in furnace oil prices will ease the pressure on power producers and help them control losses.

Khurram Schehzad, Head of Research at Invest Capital Investment Bank Ltd, said furnace oil prices are on a continuous decline, easing the burden on power generation companies.

The more furnace oil prices fall, the more it helps the country in dealing with circular debt and power generation problems, he said.

On average, local refineries were operating at 64 per cent of capacity as their production cycle has been disturbed by the inter-corporate debt, he added.

Published in The Express Tribune, July 17^th, 2010.