PSO increases price to Rs49,567 per ton

PSO has company has decided to increase prices of furnace oil based on rising international prices.

KARACHI: Local prices of high sulphur fuel oil have been increased by Rs1,455 to Rs49,567 per ton. The official spokesperson for Pakistan State Oil (PSO) told The Express Tribune that the company has decided to increase prices of furnace oil based on rising international prices.

“PSO reviews its domestic furnace oil price on a fortnightly basis since we are importing oil in bulk quantities. We pass on any changes in the international price to customers,” explained the official.

The official added that the current increase of about 3.02 per cent from the previous price of Rs48,112 per ton reflected the most recent hike in international furnace oil prices.

“This increase means higher fuel costs for independent power producers (IPPs),” commented Nurali Barkatali, an analyst at BMA Capital Management.

The bulk of domestic demand for furnace oil comes from the power sector. All IPPs in the country, except for Kot Addu Power Company, run on high sulphur fuel oil.

Local production of furnace oil was already limited due to liquidity problems faced by refineries because of the circular debt crisis. The problems have been exacerbated because of flooding in Punjab, Khyber-Pakhtunkhwa and parts of Sindh.

Experts contend that up to 70 per cent of the country’s demand for furnace oil is currently being met through imports.

Prices of high sulphur fuel oil in the local market have fallen since May, when it was being sold at just over Rs51,000 per ton. Successive reductions in prices were witnessed between May and July.

However, experts contend that international crude oil prices have firmed since then on the back of increasing demand, especially from the United States.

They predict that the stronger demand worldwide could drive furnace oil prices further up in coming weeks.

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