Power sector requires 35,000 tons of furnace oil daily to operate thermal power plants at full capacity. PHOTO: FILE
Sources told The Express Tribune that the Pakistani team expressed reservations during a meeting held in Tehran on February 27 that financial transactions by banks in import of furnace oil from Tehran will cause problems for Pakistan.
However, sources said that the team of the National Iranian Oil Company (NIOC) assured Pakistan that petroleum and finance ministries of both the countries will discuss the matter and work up a solution.
The meeting in Tehran was the follow up of Iranian offer to export large quantity of fuel on a long term deferred payment method to meet the full demand of the power sector to help ensure an uninterrupted supply and mitigate its economic woes.
At present, the power sector hardly maintains furnace oil stock to meet a day’s requirement of power plants against the mandatory reserves for 21-day coverage.
The power sector requires 35,000 tons per day of furnace oil to operate thermal power plants at full capacity. An official of the Ministry of Water and Power said the average requirement of the power sector was a million tons of furnace oil a month, of which about 250,000 tons was produced locally.
“So, if the deal materialises, Pakistan will be importing 750,000 tons per month of furnace oil from Iran,” official said, adding that this move may deprive other Middle East countries of the Pakistani market.
Sources said that Iran had offered to provide furnace oil of 280 centistoke (cst), which was not being used in Pakistan presently. Iran was also exporting 380 cst grade fuel to the world market.
The government also plans to introduce a new grade of 380 cst furnace oil by local refineries for which detailed specifications will be finalised soon,” official said, adding that it will pave way for Iranian import of fuel to Pakistan. The furnace oil with 380 cst grade is also cheaper than the existing grades.
Published in The Express Tribune, March 7th, 2013.
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@A. Khan: "Just barter something for the oil. No need to have international transfers of money or involve any Pakistani banks."
YEs, Pakistan was planing to barter oil in lieu of wheat but after years of negotiation has been unable to reach an agreement with Iran about the quality of wheat on offer and valuation of that wheat. The basket of goods that Pakistan can offer Iran is very limited.
8 years after India rejecting the IPI pipeline, Pakistan is thinking about the repercussions now. So much time and money is wasted, which India's credit bargained it to get the Indo-US nuclear deal.
Pakistan is the only country trying to forge ties with Iran, when other countries are thinking of way to limit the intake of Oil from Iran. India and China too are doing it, Pakistan thinks it can do better. Well, the writing was on wall..
@Nooristani Although this is my person point of view only, but I don't think its foolish on Iran's part. I think Iran is not aiming to make profits from this deal but is actually aiming at strengthening its regional ties and Pakistan is its easiest ally. Otherwise this deal doesn't seem profitable for Iran due to the numerous glitches in it such as the deferred payment basis.
Besides brotherly relations and all...this is a very good business opportunity...Iran is desperate to find a buyer....they are willing to provide cresit...wat else do the government want....cant they work out something..after all they let $30 billion worth of Afghan drugs transit through Pakistan
Its foolish on Iran's part to risk a payment on a deferred payment basis. Supplying to a near failed state is equivalent to gifting the oil for free.
Just barter something for the oil. No need to have international transfers of money or involve any Pakistani banks.