The Economic Coordination Committee (ECC) of the Cabinet has allowed Pakistan State Oil (PSO) to import 0.420 million tons of furnace oil through gallop tendering process on emergency basis for power generation, official sources told Business Recorder.
The ECC in its decision on June 6, 2015 on a Summary submitted by the then Ministry of Petroleum & Natural Resources decided that ""PSO may Import Petrol and Light Sulphur Furnace Oil (LSFO) on the basis of C&F and the import of High Sulphur Furnace Oil (HSFO) will continue to be imported on FOB basis through PNSC".
The Power Division has already requested Prime Minister's Advisor on Finance, Revenue and Economic Affairs, Dr Miftah Ismail for arrangement of additional Rs 200 billion for this purpose. The government released Rs 25 billion within a couple of days to CPPA for onward payment to power generation companies and PSO, and Rs 54 billion is already paid to the power sector against approved amount of Rs 80 billion.
In pursuance of the decision taken in a meeting of Cabinet Committee on Energy (CCE), a meeting was held on December 28, 2017 wherein it was decided to discontinue the import of furnace oil with immediate effect. Subsequently, Power Division conveyed that the country wide stocks of FO are at critical level which needs to be built up urgently and requested for procurement of FO on immediate basis so that demand supply gap of power sector can be minimized, especially during the ensuing summer season. The matter was referred to the CCE by Power Division, which considered it in its meeting held on 2nd April, 2018 and approved import of FO corresponding to demand of 18,000 MTs/day as placed by Power Division for the period from April to September 2018. Accordingly, PSO has floated FOB Tender for supply of FO on April 5, 2018.
According to Petroleum Division, since the PSO has to follow PPRA Rules, which require a minimum tendering time of around 60 days, the first cargo is scheduled for arrival in early June, 2018, However, in order to cater to the urgent demand of Power Division and to avoid any untoward situation during the summer months, including the month of Ramazan, it was decided that the PSO may also go for Gallop Tendering on C&F basis. Accordingly, the PSO had published a Gallop Tender on April 10, 2018 to procure 420,000 MTs (06 cargoes) of Furnace Oil on C&F basis. The lender was scheduled to open on April 18, 2018 while the delivery period of the 06 cargoes will be from May 3, 2018 to May 25, 2018.
The sources said, stocks of furnace oil in the country as on April 15, 2018 are around 335,000 MTs including 100,000 MTs with PSO, 180,000 MTs with Power Plants and 45,000 MTs with Refineries. Keeping in view the emergent situation and to meet the latest demand of Furnace Oil indicated by the Power Division - 16,000 to 21,000 MTs/day, it is proposed that the PSO may be allowed to import 6 cargoes of FO on C&F basis through Gallop Tender as a special case. The remaining demand of FO would, however, be arranged on FOB contract basis through PNSC as per usual practice.
The sources said the government has to operate Muzaffargarh Power Plant and Jamshoro Power plant to meet electricity demand as RLNG plants established in Punjab have not achieved Commercial Operation Date.
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