As CNG stations stay closed, oil demand spikes
PSO fears oil reserves may dry up if imports are not stepped up.
ISLAMABAD:
As demand for oil surges following closure of compressed natural gas (CNG) stations, the country’s largest oil marketing company, Pakistan State Oil, fears that reserves of petrol may dry up in coming days if it does not receive Rs40 billion to step up imports.
PSO, which is facing financial constraints, is demanding the release of money as it has to pay Rs91.2 billion to international oil suppliers including the Kuwait Petroleum Corporation (KPC) on account of letters of credit opened for oil imports, sources say.
CNG filling stations in Punjab have been closed for the last five days, leading to a sharp increase in demand for petrol from the consumers.
Average demand for petrol is in the range of 6,000 to 8,000 tons per day, but now it has swelled to 12,000 to 14,000 tons per day in the wake of closure of CNG stations.
In a letter sent to the ministries of petroleum, finance and water and power, the state-owned oil marketing giant cautioned that power crisis may also aggravate if Rs40 billion was not provided, part of which would be utilised to import furnace oil to meet growing demand of thermal power plants.
Power plants are increasing consumption of oil following a plunge in hydropower production due to annual closure of canals for de-silting.
“Owing to a halt in water releases through canals, the demand for furnace oil has increased and PSO needs money to arrange imports,” a source said.
At present, PSO is supplying 18,000 tons of furnace oil per day to power plants. This is in addition to the supplies being made to independent power plants (IPPs), which make payments in cash.
Talking to The Express Tribune, an official of the petroleum ministry, however, ruled out the possibility of petrol shortage, saying the country had reserves of 1.5 million tons of petrol, which were enough to meet 15 days of requirements.
Four cargoes of imported petrol were on their way to Pakistan, therefore, there would be no shortage in the country, he said.
“Long queues of vehicles at petrol filling stations are the result of panic after the closure of CNG stations, but things will normalise in the next couple of days,” he hoped.
The official said the oil industry expected consumption of 270,000 tons of petrol in December and an increase in demand in January if CNG stations continued to remain inoperative. “Growing oil demand may put an additional burden on cash-strapped PSO, forcing it to increase oil imports,” he said.
According to a PSO spokesperson, the company has adequate reserves of petrol to meet demand.
Sources say receivables of PSO from power companies and other oil buyers have jumped to Rs138.2 billion compared to Rs27.6 billion which it has to pay to local refineries.
In addition to this, PSO has to pay Rs91.2 billion to international fuel suppliers on account of letters of credit opened for import.
Published in The Express Tribune, January 1st, 2013.
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As demand for oil surges following closure of compressed natural gas (CNG) stations, the country’s largest oil marketing company, Pakistan State Oil, fears that reserves of petrol may dry up in coming days if it does not receive Rs40 billion to step up imports.
PSO, which is facing financial constraints, is demanding the release of money as it has to pay Rs91.2 billion to international oil suppliers including the Kuwait Petroleum Corporation (KPC) on account of letters of credit opened for oil imports, sources say.
CNG filling stations in Punjab have been closed for the last five days, leading to a sharp increase in demand for petrol from the consumers.
Average demand for petrol is in the range of 6,000 to 8,000 tons per day, but now it has swelled to 12,000 to 14,000 tons per day in the wake of closure of CNG stations.
In a letter sent to the ministries of petroleum, finance and water and power, the state-owned oil marketing giant cautioned that power crisis may also aggravate if Rs40 billion was not provided, part of which would be utilised to import furnace oil to meet growing demand of thermal power plants.
Power plants are increasing consumption of oil following a plunge in hydropower production due to annual closure of canals for de-silting.
“Owing to a halt in water releases through canals, the demand for furnace oil has increased and PSO needs money to arrange imports,” a source said.
At present, PSO is supplying 18,000 tons of furnace oil per day to power plants. This is in addition to the supplies being made to independent power plants (IPPs), which make payments in cash.
Talking to The Express Tribune, an official of the petroleum ministry, however, ruled out the possibility of petrol shortage, saying the country had reserves of 1.5 million tons of petrol, which were enough to meet 15 days of requirements.
Four cargoes of imported petrol were on their way to Pakistan, therefore, there would be no shortage in the country, he said.
“Long queues of vehicles at petrol filling stations are the result of panic after the closure of CNG stations, but things will normalise in the next couple of days,” he hoped.
The official said the oil industry expected consumption of 270,000 tons of petrol in December and an increase in demand in January if CNG stations continued to remain inoperative. “Growing oil demand may put an additional burden on cash-strapped PSO, forcing it to increase oil imports,” he said.
According to a PSO spokesperson, the company has adequate reserves of petrol to meet demand.
Sources say receivables of PSO from power companies and other oil buyers have jumped to Rs138.2 billion compared to Rs27.6 billion which it has to pay to local refineries.
In addition to this, PSO has to pay Rs91.2 billion to international fuel suppliers on account of letters of credit opened for import.
Published in The Express Tribune, January 1st, 2013.
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