Fractured supply chains

Furnace oil stocks are going to be depleted as PNSC has refused to supply vessels for transportation of fuel to PSO

The power problems that are experienced by the men and women of Pakistan are not caused by any single factor. They are a complex mix of failure, bad management, corruption, power theft by consumers — and now a breakdown in the supply chain. The majority of the power consumed is generated by the most expensive means of production that there is in the world, namely by importing oil to fuel the power stations. Oil is imported principally from the Gulf States by ship and herein lies the seeds of yet another glitch in power supplies.



The Pakistan National Shipping Corporation (PNSC) is refusing to supply vessels for the transportation of fuel to Pakistan State Oil (PSO) because the government has barred the PNSC from taking contracts that are more lucrative than those on offer from PSO. This was done in order to try and ensure there was sufficient capacity in the PNSC ships to allow for the import of the all-important furnace oil. To the surprise of nobody, the PNSC is less than delighted about this development and a tangled scrap is now ‘in process’. There is a distinct possibility that furnace oil stocks are going to be depleted because the PNSC has refused to supply vessels not only in the short term, but in the long term as well, the consequences of which are unthinkable.

Pakistan is currently experiencing one of the hottest summers on record, hundreds have died as a result of the heat in Karachi, the inadequate power supplies just got even more inadequate in the face of searing heat — and two key entities PSO and the PNSC are contributing to the collective national woes by failing to resolve a crucial issue. Each blames the other for the problem, and there is little doubt that at the heart of it all is the government requirement that PSO must rely on the PNSC — and vice versa. If ever there was a recipe for disaster that is it. With both sides forced into an inefficient business model, the resolution has to lie with the government, which is going to have to move fast to avoid a complete breakdown in the supply chain.

Published in The Express Tribune, June 24^th,  2015.

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