Oil supply contract between PSO and PNSC expired

Aftab Ahmed

Islamabad

The furnace oil supply contract between Pakistan State Oil and Pakistan National Shipping Corporation (PNSC) has expired over failure to reach agreement on outstanding issues.

A senior government official said that prior to ban imposed by the government on import of furnace oil, Pakistan State Oil (PSO) used PNSC to transport furnace oil on FOB basis under a contract of affreightment (COA) between two companies. However, due to long outstanding issues relating to the COA between two parties, Petroleum division had referred the matter to the Economic Coordination Committee (ECC) of the cabinet in May 2018 for termination of the COA with PNSC and resumption of furnace oil imports on C&F basis through opening bidding process.

However, ECC decided that PNSC and PSO should resolve the issue mutually at their own level without referring it back to the ECC.

In compliance of this decision, PSO had requested PNSC in August 2018 to address PSO,s concerns with respect to the COA and consequent renewal of the same. However, no response was given by the PNSC.

Subsequently, the term of COA completed on November 30, 2018 without PSO and PNSC reaching to any agreement on the outstanding issues. As such, COA stands expired since December 2018 as informed by PSO to petroleum division, official said.