Fuming over furnace oil

Oil marketing companies reported a fresh increase in furnace oil prices, citing the spiraling cost of oil abroad.

KARACHI: Rising international oil prices continue to inflate the cost of energy in Pakistan. Oil marketing companies reported a fresh increase in furnace oil prices on Monday, citing the spiraling cost of oil abroad.

Prices of imported furnace oil have been increased by Rs1,163 to Rs50,861 per ton. National Refinery and Pakistan Refinery have each increased rates by Rs639 to Rs50,916 per ton while Pak-Arab Refinery has enhanced prices by Rs120 to Rs52,797 per ton.

“Domestic furnace oil prices are reviewed on a fortnightly basis and since we are importing oil in bulk we pass on any changes in the international price to our customers,” explained a spokesperson for Pakistan State Oil (PSO).

“The international prices of furnace oil increased by 6.6 per cent in October compared to the previous month,” said BMA Capital analyst Hamad Aslam, adding “this surge is higher than the change in crude oil prices.”

Aslam pointed out that prices have risen by about 5 per cent so far this year.

PSO threat

PSO has announced that it will halt supplies of furnace oil to Hub Power Company (Hubco) and Kot Addu Power Company (Kapco) from Tuesday. “An ultimatum has been sent to Hubco and Kapco to pay interest charges as well as their due amounts or share a payment plan,” said the spokesperson for PSO, adding “it they do not pay up, PSO will be left with no option but to suspend supplies from today (Tuesday) onwards.”

“PSO has exhausted its financial resources for arranging products for these customers,” said the official and added “due to the private power producers’ failure to pay, PSO is facing severe liquidity constraints.”

Earlier on Friday, PSO had sent notifications to relevant ministries requesting intervention for the release of outstanding dues. Documents obtained by The Express Tribune show that overdue receivables from Hubco stand at Rs57.5 billion while the same for Kapco stand at Rs26.9 billion.

Meanwhile, Rs40.8 billion is due from Wapda, after PSO received payments worth Rs800 million on Monday. When contacted, Hubco officials declined to comment while Kapco officials could not be reached.

Published in The Express Tribune, November 2^nd, 2010.