PSO refuses oil supply at subsidised rate to KESC

Lack of liquidity, communication between companies does not augur well for consumers.

KARACHI: Pakistan State Oil (PSO) turned down a request by Karachi Electric Supply Company (KESC) to provide furnace oil to the electricity provider at subsidised rates, dashing hopes for an early end to the persisting electricity crisis in the country’s industrial hub.

“A cheque worth Rs65 million was sent to PSO by KESC on Wednesday morning in order to obtain additional furnace oil to meet the gap caused by reduction in gas supply to the company,” said KESC’s spokesperson Amir Abbasi. “However, by the afternoon that cheque had been returned along with a request to pay the full price at the rate of furnace oil instead of gas,” added Abbasi.

He explained that KESC managing director Tabish Gauhar, SSGC managing director and representatives of industries and trade associations met Sindh Governor Ishratul Ibad on Tuesday. “In that meeting, KESC was given assurances that the company would be provided additional furnace oil at the rate of gas in order to overcome the shortage of gas,” contended Abbasi.

However, the official PSO spokesperson highlighted that “the ministry for petroleum and natural resources has, in consultation with the ministry of water and power, given directives to PSO to provide an additional 2,500 tons of furnace oil per day to KESC at full price for five days.”

The official admitted that under the gas outages management plan, PSO provides furnace oil at the rate of gas to KESC and the price differential is paid by the ministry of finance.

Citing the company’s bloated outstanding liabilities, the official added “the company had requested the government to review its policy such that buyers of furnace oil would pay PSO the full amount and claim the gas price differential directly from the finance ministry.

“For these five days, PSO is supposed to provide additional furnace oil but KESC has to pay for it in full and redeem the price differential from the ministry of finance itself,” added the official.

However, when questioned about whether KESC would resend a cheque for the full cost of furnace oil, the KESC official responded that “the company does not have enough liquidity to be able to buy furnace oil without a subsidy.”

The continuing tirade between the two companies does not bode well for the city’s electricity supply. Irked by incessant power outages, prominent industrialists have renewed calls to the government to formulate a comprehensive plan to combat the energy shortfall.

“Export-oriented businesses are affected the most due to frequent outages,” FB Area Association of Trade and Industry Chairman Shahid Ismail told The Express Tribune.

He criticised the energy sector for failing to provide uninterrupted power supply to industries and warned that “this is making the already competitive business environment unviable.”

Karachi Chamber of Commerce and Industry President Saeed Shafiq said “this shows a lack of internal coordination between different companies within the energy sector. Instead of public displays of distress they should be sitting together to resolve issues so that they can serve their customers like they are supposed to,” he added.

Shafiq also revealed that industrialists and other stakeholders are meeting with representatives of the government on Thursday and expressed hope that these meetings will bear fruit, bringing a solution to the impending power and gas shortages.

70MW of electricity lost due to closure

Karachi Nuclear Power Plant (KANUPP) has shut down once again. “KANUPP tripped on Wednesday afternoon and the supply of electricity from the plant halted,” an official told The Express Tribune.

KESC, which is already struggling to meet electricity demand since Sui Southern Gas Company reduced the supply of natural gas, has been left with an additional shortfall of 70 megawatts.

“We are not expecting the plant to be back online before Friday,” said KESC’s spokesperson. He added that the company is hoping that the gas supply will normalise soon and also contended that the company is negotiating with PSO for additional supply of furnace oil. However, KESC has not ruled out the possibility of increased power outages in the city over the next two days.

Published in The Express Tribune, November 4^th, 2010.