PSO increases spending on oil imports by 32 percent

The cash-strapped Pakistan State Oil (PSO) increased spending on oil imports by over 32 percent to Rs 537.372 billion during financial year 2009-10 against Rs 363.087 billion in 2008-09 due to low throughput by oil refineries, Business Recorder has learnt reliably.
PSO spent Rs 231.134 billion on import of HSD, Rs 212.532 billion on HSFO, Rs 20.854 billion on JP-1, Rs 50.945 billion on LSFO and Rs 21.906 billion on PMG imports during 2009-10. PSO imported 0.28 million metric tons (MT) Mogas, 0.37 million MT JET A-1 and 3.87 million MT HSD.
In July 2009, the cabinet committee on energy directed PSO to import and supply 35,000 metric tons per day fuel to power sector. Due to limitation of FOTCO port, PSO had to pay over one million dollars demurrage on import of petroleum products during 2009-10.
Industry sources said that the current energy crisis also owed much to the country's lower refining capacity. The fuel consumption has surged due to greater reliance on thermal power generation. PSO imported 5.54 million MT HSFO and 1.16 million LSFO in 2009-10 against 4.10 million MT and 0.99 million MT respectively in 2008-09. During financial year 2009-10, total oil consumption was 9.1 million MT whereas refinery production stood at 2.6 million MT.
In 2008-09, total oil consumption was 7.94 million MT and total refinery output was recorded at 3.1 million MT. The country had to rely on 4.84 million MT imports of petroleum products. In year 2007-08, total consumption of petroleum products was 7.45 million MT and total refinery production stood at 3.315 million MT. The imports contributed 4.14 million MT to meet the country's requirements. PSO official said that despite circular debt issue, PSO was arranging deficit petroleum products by imports. "Due to lower refinery output, PSO had to import petroleum products to meet the country requirements," official maintained.
"Refineries earned huge profits during the year 2007-08 due to high prices in international market coupled with excellent refinery margins but even at that time refineries production was low," official said attributing low refinery throughput especially in 2009-10 to negative 'refinery margin' rather than the circular debt issue. "Due to low refineries production capacity, imports were approved with consent of refineries in monthly Product review meeting Chaired by Director General (Oil)," he added.
He claimed that refineries had reduced fuel supply to PSO because of its inability to pay dues due to circular debt issue. "PSO is also paying exorbitant financial charges to banks due to heavy borrowing to supply fuel to power sector," the official added.