Govt likely handing over APL to Byco
Aftab Ahmed
The government is likely to hand over Asia Petroleum Limited (APL) to Byco Refinery to utilize it for transporting oil.
Sources said that management of Byco refinery has proposed utilization of APL pipeline for transporting 90 percent of its white products from refinery to Port Qasim.
They said that Byco had assured to make all necessary arrangements including reverse pumping system pipeline connectivity, line fill, product intermix handling, and storage facilities, etc.
Byco will also invest in laying a pipeline connecting Hubco for transportation of RFO as and when required.
At present, APL had faced a financial default due to the shift of government in using fuel oil in the power sector. This policy had put an annual burden of $12.7 million on the government. The company is sustaining a loss due to a shift in the policy of the government.
This has allowed economic policymakers to allow APL to obtain a credit facility from a bank by promising movable and fixed assets of the company. The government has also approved a supplementary grant of Rs 1.9 billion through Pakistan State Oil (PSO) during the last financial year to meet the shortfall in APL.
https://newztodays.com/byco-refinery-starts-export-of-furnace-oil/
Petroleum Division officials said that due to the low use of furnace oil in power plants – Hub Power Company (Hubco), the supply of oil almost cut off through the APL pipeline.
In case of delay in payment to APL, the government would also need to bear the late payment surcharge. Therefore, the finance division had immediately taken up with the Finance Division.
The paradigm shift in the use of furnace oil in the power sector has put the burden of 12.7 million dollars annually on the government for APL. In this regard, for the financial year 2019, the government paid Rs 1.9 billion for the reduction of APL throughput through a supplementary grant.
The government has also allowed availing credit facilities against the company’s movable and immovable assets. APL was incorporated in Pakistan on July 17, 1994, as an energy and infrastructure company established to transfer RFOs through its terminal and pipeline system.
It was built on June 26, 2003, under an agreement between the Government of Pakistan and the APL under the Commission to transfer RFOs from Port Qasim through the Hubco Pipeline System, which generates 1,292 MW of electricity in Balochistan.
Subsequently, PSO and APL entered into an agreement on May 13, 2004, to supply furnace oil to Hubco at a throughput of 1.5 million tons per tonne at a tariff of $12.12 per ton for the first 19 years and $8.49 per tonne by 2027.
The government provided a sovereign guarantee to cover any shortcomings in the guaranteed throughput.
The main reason behind the decline in revenue was the decline in demand for furnace oil from the Power Division as the government’s policy was to increase the consumption of cost-effective fuels like LNG and other alternative sources instead of FO.
According to APL, the shutdown of RFO supplies through its pipeline was creating shortfall claims, and that the company was facing financial and operational challenges. Therefore, in order to meet the liquidity requirements, the company had sought assistance from different banks.
