IPPs’ Lower upliftment of furnace oil causes refineries stocks crisis
News Report
The Upliftment of furnace oil has been 36% lower than the demand which led to furnace oil stocks issues at the local refineries.
Briefing the standing committee on the cabinet, Chairman OGRA said while discussing issues relating to the import of Furnace Oil and its impact on Oil Refineries.
The power plants have to keep mandatory stock ranging from 15-30 days stock cover.
Refineries offer discounted Furnace Oil Prices for Power Plants
The chairman said that refineries are carrying high Furnace Oil inventories and PARCO, ARL, BYCO are operating at low throughput while PRL has shut down.
However, the NRL refinery is on planned maintenance.
Procedure for Import of Furnace Oil
As per the CCoE decision dated 20 June 2020, the cabinet body on energy had allowed private IPP’s to import Furnace Oil through PSO and other OMC after getting a NOC from the Power Division.
Power division conveys firm demand for furnace Oil for the power sector to the Petroleum division with the view to arrange the furnace oil stocks.
Keeping in view the demand, the oil marketing companies fulfill the demand through purchases from local refineries and imports. The data for the period July to Nov 2021, suggests there is a significant variation between the demand and the subsequent upliftment by the power plants.
Upliftment was 36% lower than the demand during the said period which led to ullage issues at the local refineries.
The way forward to handle furnace oil stocks issues
In view of the aforementioned, Ogra chairman suggested that the Power division should play its role in ensuring that the FO made available as per its demand is uplifted by the respective power plants.
The power plants have to keep mandatory stock ranging from 15-30 days stock cover. The latest stock position of FO along with ullage available with the power plants showed several IPPs had zero stocks.
He said that refineries need to upgrade their plants from hydro-skimming to deep conversion technology so that they are able to reduce their furnace oil production or convert it into lighter fuels.
The power division has to ensure that the firm demands furnace oil with a variance of no more than 5%.
