ISLAMABAD: The Power Division has requested the Finance Ministry to release half of the tariff differential subsidy's amount allocated for FY 2020-21 to import over 1 million metric tons of HSFO and LSFO, respectively to meet fuel requirements of Gencos and IPPs, well-informed sources told Business Recorder.
A meeting under the chairmanship of Minister for Energy was held in the Power Division on September 25, 2020. Special Assistant to the Prime Minister on Petroleum and Natural Resources and former SAPM on Power along with Secretaries of Power Division and Petroleum Division attended the meeting.
The meeting reviewed energy supply and demand in the national grid system. National Power Control Centre (NPCC) apprised that owing to low stock of LSFO and RFO many Gencos and IPPs have very low fuel inventory while the gas and RLNG supply might also be downgraded in view of increasing demand of gas in coming months.
Keeping in view, the current fuel situation the forum reviewed the power demand for October, November, December 2020 as well as January 2021. Petroleum Division indicated that during the winter further RLNG will be diverted to domestic gas sectors and there would be an expected cut in RLNG and natural gas supply to power sector. Additional fuel supply chain would be required to maintain power in grid through the HSFO and LSFO fired power plants.
The meeting was apprised that due to expected power demand as forecast by NPCC, it was estimated that a total of 736,078 MTs of HSFO and 362,080 MTs of LSFO would be required from October 2020 to January 2021 to maintain adequate power supply and strategic reserves.
Petroleum Division indicated that the local refineries would not be in a position to meet such demand. Therefore, the required quantity would have to be imported. It was agreed that Petroleum Division would confirm the local LSFO/HSFO availability and remaining demand would be met through import of Petroleum Division.
The representative of CPPA-G noted that currently the cash flow position to procure the required supply was not adequate and additional financial finances would be required to augment the cash flow to maintain such oil supply chain. Further, it was apprised that the Finance Division has so far not released first quarter subsidies.
Power Division has proposed that Petroleum Division make arrangements for the import of HSFO and LSFO of over 1 MMT for relevant Gencos and IPPs. Power Division has also requested Finance Division to release 50 per cent of TDS budgeted for 2020-21 to enable CPPA-G to make payment for the FO requirements.
Recently, Hub Power Company (Hubco) sought permission from government to import 35,000 MT furnace oil urgently for its 225 MW Narowal power plant . M/s Hubco has also written a letter to the Power Division, saying that power plant in Narowal has been supplying electricity to the national grid, mainly to maintain voltage in the area since 2011.
On October 2, 2002, in a letter to the Prime Minister's Special Assistant on Petroleum and Natural Resources, Nadeem Babar, Chief Executive Officer (CEO), Hubco, Khalid Mansoor, said the power plant has 6,000 tons of RFO stock, which is barely enough for one week of generation at full load.
He further stated that Be Energy Ltd is Hubco's main source of fuel supply under the Fuel Supply Agreement (FCA) of March 2, 2009.
"We have placed a total order for 25,000 MT of RFO for October and November, 2020 as per generation demand, which they are unable to supply to us due to acute shortage of RFO in the local market," he added.
The power company argues that keeping in view the fast declining RFO stock at the Narowal power plant due to continuous despatch by National Power Control Centre (NPCC) and unavailability of RFO within Pakistan, it is essential to immediately import RFO.
In the light of the decision of the Cabinet Committee on Energy (CCoE) in its meeting held on June 20, 2020 to allow IPPs to import RFO through Oil Marketing Companies, the company has requested that its fuel supplier, Be Energy Ltd, be allowed to import 35,000 tons of RFO on immediate and urgent basis to mitigate the shortage of fuel in the country.
According to CEO, Hubco Narowal is committed to take 25,000 tons of RFO to ensure that its power plant remains available for electricity generation in these months. M/s Hub has requested different relevant Ministries that considering the long lead time in terms of the entire import process, it should be given urgent approval for the issuance of No Objection Certificate (NOC).
Copyright Business Recorder, 2020
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