TUESDAY APRIL 23: Import of RFO, LSFO for Gencos: policymakers in the dark: how to arrange Rs 77 billion

ISLAMABAD: Pakistan State Oil (PSO) is to import Residual Fuel Oil (RFO) and Low Sulphar Furnace Oil (LSFO) worth Rs 77 billion for public sector Generation Companies (Gencos) for May and part of June 2013, official sources told Business Recorder. However, policymakers are in the dark as to the source of the required funds given the serious resource constraints being faced by the Finance Ministry.
The sources said Gencos need 18000 Metric Tons Residual Fuel Oil (RFO) and 5500 MT Low Suplhar Furance Oil (LFO) on daily basis in May and part of June to run the plants at maximum capacity. Recently, PSO made it clear that if more fuel is required by the Ministry of Water and Power then Ministry of Petroleum and PSO must be provided firm demand along with requisite fund arrangements, otherwise PSO will not be in a position to meet any additional demand.
According to sources, PSO, Ministry of Finance and Water and Power have already shown agreement that every new Letter of Credit (LC) for the furnace oil will be endorsed and guaranteed for payment and then it will be 'established'. Finance Ministry recently approved Rs 20 billion to procure furnace oil for the power sector; one instalment of Rs 10 billion is yet to be released.
"We have requested the Finance Ministry to arrange extra Rs 15 billion to deal with crisis like situation, but we do not know how Finance Ministry will arrange the required amount," an official said. An official close to the caretaker Minister for Water and Power told this scribe that Ministry of Water and Power had requested the Ministry of Petroleum and Natural Resources to increase the oil supply to power sector. As a result Petroleum Ministry has agreed to supply 25000 MT oil to power sector. MoF has agreed to support this fuel supply through financial support and additional subsidy of Rs 57 billion. Power sector will generate Rs 11 billion from its own resources.
All Pakistan Textile Manufacturers Association (APTMA) maintains that since caretaker government has taken over the affairs of the country the power situation has worsened. "Caretakers are unable to understand the real issue though we are trying to explain the issue," said Gohar Ijaz, Group Leader APTMA. According to him, 200 MMCFD gas is out of transmission system of SNGPL as the gas field is shut down but the caretaker Minister for Petroleum is unaware of this situation. He praised Dr Asim Hussain, former Petroleum Minister, who distributed gas among the stakeholders in accordance with the approved formula. However, after his departure the performance of the Ministry is questionable, he added.
To a question, he said that last year textile industry was supplied gas for five days and now the situation is deteriorating. He also criticised the government for stopping gas supply to Captive Power Plants (CPPs) which were generating power at Rs 6 per unit.