Pakistan Electric Power Company (Pepco) has been accused of placing high sulphur furnace oil (HSFO) orders without inviting tenders, which is a gross violation of transparent business rules. This complaint has been lodged by Overseas Oil Trading Company (Pvt).) Limited (OOTCL) to the Minister for Petroleum, Minister for Water and Power, Bakri International Energy, Kuwait, and Bakri International Energy, Jeddah, Saudi Arabia.
Pakistan State Oil (PSO) and Bosicor, Pakistan, Limited are already in a dispute over the supply of furnace oil to Pepco''s thermal power stations. OOCTL is regular supplier of fuel oil to Pepco''s power plants at Muzaffargarh and Jamshoro for the last three years.
During this period, the firm claimed that it had supplied about 900,000 tons of fuel oil to both the thermal power plants. Under the government''s deregulation policy, the company has made huge investment in the country in foreign exchange and own and operate state of the art terminal at Port Qasim to meet its customer''s demand of petroleum products.
The company''s storage capacity for fuel oil is 120,000 tons and is able to supply up to 10,000 tons per day. According to the letter, the firm has recently imported a cargo of 50,000 tons fuel in July 2009 and participated in the tender for supply of HSFO issued by Muzaffargarh and Jamshsoro.
On competitive bidding basis, OOCTL won purchase orders to supply 25,000 tons HSFO to Muzaffargarh and 10,000 tons to Jamshoro, which were supplied, as its prices are lower than the PSO. "To our utter surprise, we did not receive ''tender enquiry notice for supply of fuel oil during first fortnight of August, either from Muzaffargarh or from Jamshoro.
"On enquiry, we have been informed that the order for supply of HSFO to Muzaffargarh and Jamshoro has been placed with PSO without inviting tenders. This is a gross violation of transparent business rules, necessary for public sector company," said OOTCL Managing Director Javed Alam in the letter, a copy of which is available with the newspaper.
To ensure security of supplies, the company had proposed that Pepco should act in a transparent manner, he said, adding the Pepco should be asked to issue tender for term contract to supply fuel on competitive bidding to get best rates, which would ultimately benefit Pepco and reduce burden on common man.
Alam said the firm was a major oil supplier of fuel oil to Pakistan for the last 15 years, under the Fuel Supply Agreements (FCAs) with the government of Pakistan and PSO. The firm also procures fuel from local refineries - PRL, NRL and Parco.
Bosicor had also expressed its willingness to supply local product during August 2009, but with regard to supply of imported furnace oil, the company stated that there was no slot available for August and September. However, the company agreed to import furnace oil for October 2009. PSO immediately approached the OCAC for cancellation of three lay-cons of HFFO allocated to Bosicor for October.
PSO, in its letter to OCAC, said it was surprised to receive such notification. In the product review meetings in July and August 2009, chaired by Director General (Oil), it was explained that PSO had been directed to supply 35,000 metric tonnes per day of fuel oil to power sector to reduce the power shortages prevailing in the country. Consequently, the Ministry of Petroleum allocated foreign exchange for the procurement of fuel oil.
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