PSO cancelled tender: Furnace oil price up to Rs 120,000
Aftab Ahmed
Pakistan State Oil (PSO) has canalled a tender of furnace oil import due to higher price it received in a bid that has increased to over Rs 120,000 per ton.
The price of furnace oil in local market is Rs 75000 per ton. However, PSO received a bid of furnace oil over Rs 120,000 per ton due to shortage of supplies in summer season. The demand of furnace oil has also gone up in Pakistan due to replacement of Engro FSRU.
Engro FSRU handles 600 mmcfd LNG. Following its replacement, the gas shortage in the country will increase. Therefore, the demand of furnace oil will jump up that is also likely to increase price of furnace oil in local market.
Sources told Newztodays.com that PSO had invited bids to import furnace oil. However, it received a price of over Rs 120,000 per metric ton that was double compared to the price of furnace oil at Rs 75000 metric ton.
As the summer approaches, the demand of furnace has jumped up. The country needs higher electricity generation and therefore it needs furnace oil following dry dock of LNG terminal from June 30.
Earlier, the government had directed Pakistan State Oil (PSO) to lift furnace oil from the local refineries to meet the power sector’s demand.
To ensure the refineries’ smooth operations, the government had advised PSO to account for Locally produced furnace oil before finalizing the import.
Director-General Oil (DG) Petroleum Division held a meeting on the power sector’s furnace oil demand and supply situation.
https://newztodays.com/cabinet-body-okays-lifting-ban-on-furnace-oil-import/
Given reduced availability of RLNG for power generation and a low inventory of furnace off at GENCOS/IPPs, NPCC tabled their revised demand of furnace oil for the corresponding periods.
Officials informed that as regard LSFO demand, PSO was advised to import furnace oil. It has also started lifting furnace oil from Attock Refinery Limited (ARL).In addition, it had already lifted furnace oil from the refineries to meet the demand of power plants.
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However, power sector had refused to lift the furnace oil from it. PSO had taken up the matter with ministry of petroleum. Refineries had also approached the petroleum division, saying that stocks of furnace oil were piling up due to low offtake by oil marketing companies.
However, IPPs were reluctant to place purchase orders due to the price differential between imported furnace oil and refineries’ produced furnace oil. The government binds OMCs to consume refineries’ produced finished products before import plan as per standing instruction of the Federal Government. He said that OMCs could import only deficit volumes.
Besides the above, refineries offered that they can allocate the maximum product to PSO.
READ PSO proposes shares transfer to Mari, OGDCL, PPL.
As furnace oil is a deregulated product, refineries may take appropriate measures to resolve price differential issues between locally produced furnace oil and imported ones.
