AGL 40.00 Decreased By ▼ -0.16 (-0.4%)
AIRLINK 129.53 Decreased By ▼ -2.20 (-1.67%)
BOP 6.68 Decreased By ▼ -0.01 (-0.15%)
CNERGY 4.63 Increased By ▲ 0.16 (3.58%)
DCL 8.94 Increased By ▲ 0.12 (1.36%)
DFML 41.69 Increased By ▲ 1.08 (2.66%)
DGKC 83.77 Decreased By ▼ -0.31 (-0.37%)
FCCL 32.77 Increased By ▲ 0.43 (1.33%)
FFBL 75.47 Increased By ▲ 6.86 (10%)
FFL 11.47 Increased By ▲ 0.12 (1.06%)
HUBC 110.55 Decreased By ▼ -1.21 (-1.08%)
HUMNL 14.56 Increased By ▲ 0.25 (1.75%)
KEL 5.39 Increased By ▲ 0.17 (3.26%)
KOSM 8.40 Decreased By ▼ -0.58 (-6.46%)
MLCF 39.79 Increased By ▲ 0.36 (0.91%)
NBP 60.29 No Change ▼ 0.00 (0%)
OGDC 199.66 Increased By ▲ 4.72 (2.42%)
PAEL 26.65 Decreased By ▼ -0.04 (-0.15%)
PIBTL 7.66 Increased By ▲ 0.18 (2.41%)
PPL 157.92 Increased By ▲ 2.15 (1.38%)
PRL 26.73 Increased By ▲ 0.05 (0.19%)
PTC 18.46 Increased By ▲ 0.16 (0.87%)
SEARL 82.44 Decreased By ▼ -0.58 (-0.7%)
TELE 8.31 Increased By ▲ 0.08 (0.97%)
TOMCL 34.51 Decreased By ▼ -0.04 (-0.12%)
TPLP 9.06 Increased By ▲ 0.25 (2.84%)
TREET 17.47 Increased By ▲ 0.77 (4.61%)
TRG 61.32 Decreased By ▼ -1.13 (-1.81%)
UNITY 27.43 Decreased By ▼ -0.01 (-0.04%)
WTL 1.38 Increased By ▲ 0.10 (7.81%)
BR100 10,407 Increased By 220 (2.16%)
BR30 31,713 Increased By 377.1 (1.2%)
KSE100 97,328 Increased By 1781.9 (1.86%)
KSE30 30,192 Increased By 614.4 (2.08%)

ISLAMABAD: Pakistan State Oil (PSO), the state-owned fuel supplier, is annoyed with Central Power Purchasing Agency- Guaranteed (CPPA-G) for allowing two Independent Power Producers (IPPs) to purchase their fuel from any Oil Marketing Company (OMC).

PSO’s General Manager, Consumer Business, Ghulam Murtaza Shaikh, has conveyed the company’s anger in a letter to Chief Executive Officer (CEO), CPPA-G, seeking rectification of decision. The copy of letter has also been sent to Secretary Petroleum and other relevant authorities.

PSO’s letter is with reference to the Court Orders of June 29, 2022 passed by the Lahore High Court in pursuance of the two separate PPA Amendment Agreements both of April 20, 2021 executed between Central Power Purchasing Agency- Guaranteed (CPPA-G), Pakgen Power Ltd. (Pakgen) and Lalpir Power Ltd. (Lalpir), respectively. Both the IPPs and CPPA-G are parties to these agreements.

PSO maintains that upon review of the PPA Amendment Agreements, it appears that the parties have mutually agreed to allow IPPs to procure fuel from other OMCs as well.

PSO urges Power Div to revisit furnace oil demands

According to PSO, PPA Amendment Agreements have been executed between the parties pursuant to the award of December 18, 2020 passed through arbitration conducted under the International Chamber of Commerce Rules of Arbitration, in favour of the IPPs, declaring inter-alia that there is no obligation on the IPPs to purchase residual fuel oil from PSO alone.

PSO has highlighted that earlier the Govt. of Pakistan (GoP) entered into separate Implementation Agreements with the IPPs of September 24, 1994 (Implementation Agreements) whereby PSO was declared as a sole fuel supplier to IPPs. In terms of the Implementation Agreements, Power Purchase Agreements were executed between Water and Power Development Authority (WAPDA) and Pakgen and Lalpir on September 05, 1995 and November 03, 1994, respectively whereby PSO was defined as a sole fuel supplier to the IPPs.

The state-owned fuel supply company has maintained that based on the exclusivity given to it as a sole fuel supplier, Pakgen and Lalpir entered into the Fuel Supply Agreements on September 07, 1995 & November 06, 1994, respectively, with PSO in terms whereof the IPPs have to purchase fuel, diesel oil, lubricants, and greases from PSO.

PSO has further argued that the IAs, PPAs and the FSA are inter-linked with each other forming part of a complete supply arrangement. Accordingly, the FSAs are interlocked with the PPAs. Thus the amendment/ decision related to one agreement would lead to corresponding impact/ changes in the other agreements, as well. Therefore, PSO being one of the key parties and stakeholder of the said supply arrangement should have been engaged, informed and taken into the loop of the amendments made in the PPAs through PPA amendment agreements.

The fuel supplier said that in terms of the FSAs, PSO has made huge investments, particularly in terms of fuel oil storages, operational facilities and logistic to ensure timely fuel oil supplies to the IPPs as per the requirement forwarded by the Ministry of Energy (Power Division) and the monthly forecast given by the IPPs irrespective of the operation of the plants.

“PSO has to maintain the stocks inventories and facilities in order to make the fuel oil supplies available to the IPPs as per terms of the FSAs despite low/ non-upliftment by the IPPs. Therefore, the amendment in the PPAs through PPA IA is directly affecting PSO’s investments and the company is incurring significant losses due to low/ non-upliftment of fuel oil by IPPs against their entire fuel oil demand,” said, Ghulam Murtaza Shaikh.

After explaining the entire scenario, he has requested CPPA-G to understand its position and take appropriate measures so that the IPPs should be encouraged to uplift their entire fuel requirements from PSO.

Copyright Business Recorder, 2022

Comments

Comments are closed.

Imran Sheikh Sep 19, 2022 11:10am
PSO should improve its efficiency, and compete for market share. Prices lowered through competition benefits the end-consumer, the public. No State organisation should be given protection at public expense except in very exceptional circumstances, e.g. for projects essential for public uplift being implemented in troubled areas having a real security risk.
thumb_up Recommended (0)