Getting stuck: Port congestion delays offloading of oil products

PSO fears farmers and power producers could face fuel shortage.

ISLAMABAD:

Pakistan State Oil (PSO) has encountered trouble in bringing imported petroleum products to the shore because of congestion at the port, triggering fears that farmers and power producers could face crippling oil shortage in the summer.

In a letter sent to the Ministry of Petroleum and Natural Resources on April 3, the PSO management also cautioned that the country could face a hard time in importing liquefied natural gas (LNG) in the wake of delay in offloading goods from ships at the Karachi Port.

In this situation, consumers are forced to bear the cost of demurrages, running into millions of dollars, paid for delay at the port.

In the summer, demand for high-speed diesel (HSD) and furnace oil rises from the agriculture sector and power plants respectively.

“We would like to bring to your notice that HSD pipeline at Fotco (Fauji Oil Terminal) has been running at restricted flow rates/pressure due to corrosion in sections of the system. This has affected offloading and movement of HSD and furnace oil from vessels berthing at the port,” PSO said in the letter.

With the jump in HSD demand for the upcoming crop harvesting season and higher furnace oil needs of power plants in the summer, all oil marketing companies including PSO have stepped up imports to cater to their marketing requirements. As a result, the number of vessels arriving at Fotco has increased.

“This increase in vessels coupled with additional layover time of vessels at the terminal … is resulting in congestion and demurrage (charges),” PSO said.

The oil marketing company has highlighted infrastructure constraints at ports at various levels and cautioned this will not only lead to delay in petroleum product imports, it will also hamper LNG purchases in future. “While PSO is making all efforts to meet fuel needs of the nation, we request you to look into the matter and extend support for its resolution.”

The port congestion is another issue highlighted by PSO. It has also complained about late provision of vessels by state-owned Pakistan National Shipping Corporation (PNSC) for bringing oil shipments.

Already in early January, the delay in oil purchases had caused an acute petrol shortage in Punjab, resulting in long queues at filling stations and suspension of government officials for alleged negligence.

Published in The Express Tribune, April 12^th, 2015.

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