It did not last long. Furnace oil based power generation is back in business. The Prime Minister has reportedly ordered almost all furnace oil based power generation units to be brought online, at least for now. Only if this decision was taken before the refiners almost went to a halt in production due to ban on FO based power generation.
It is not clear whether the decision to allow FO based generation is by choice or by design – but refineries could care less for the reason, as long as they are able to get the units running. From what it increasingly appears, the hollow claims of zero load shedding caught up too fast with the government. The timings could not have been worse, as hydel generation has stooped to new lows, and increased gas demand in winters has meant lower gas based generation too.
But the second LNG terminal has not been handling any LNG ever since its first shipment, which goes on to show it is a calculated move to get clear of the FO inventories with refineries and PSO. If gas demand was the only reason, the second LNG terminal would still be handling imported gas today. Mind you, PSO has been facing huge demurrage cost at over $100,000 a week and something had to be done. Moreover, the near shutdown at refineries also meant shortage of jet fuel and reduced off-take from local E&P companies.
A little birdie at a leading refinery told BR Research that such is the level of understanding at the relevant ministries that a certain secretary admitted of not even knowing that banning FO based power generation could cause such a big issue for refineries. The power and petroleum divisions of the ministry are just one floor apart – yet the decision making makes it seem seven seas apart.
The merger of ministries would serve little purpose if it remains symbolic and there is no coherence in decisions of such importance. The last month and so at the energy ministry is clearly a case of too many cooks. Surely it is no rocket science to think before acting, and taking decisions mutually or at least take the other wing of the same ministry on board.
All is well that ends well they say, so refineries should breathe a sigh of relief. Meanwhile, the ministry would do well to chalk out a detailed plan for refiners, power producers, gas companies, terminals and all others involved, to avoid embarrassment of such magnitude again.
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