The Pakistan State Oil (PSO) is pointing a finger at the Pakistan National Shipping Corporation (PNSC) and the federal government for contributing towards the current fuel crisis in some of the country's major cities. With the state-run PSO having gone out of cash to import Black and White fuel to meet country's daily demand for Motor Gasoline Shortage (Mogas) currently standing at 1200 kilo litres in Lahore, 800 kilo litres in Faisalabad and approximately 1,800 kilo litres in southern Punjab.
They said there had recently been an upsurge in demand of Mogas primarily due to fall in its prices and shortage of CNG as fuel for vehicles. The prices of Mogas shrank to Rs 78.28 a litre as on January 2015 compared to Rs 107.97 of the same date last year. Consequently, in the first two weeks of this month, average demand for Mogas in the country was 26 percent higher than the same period of last year (SPLY). The demand stood at 15,291 tons per day against 9,747 per day and against the forecast of 12,316 tons per day.
The daily demand averaged on 27,271 metric tonnes against the actual sales of 15,291 MT. The PSO, officials claimed, played an active role in coping with the challenge posed by a higher demand. Accordingly, the company's sales during the first half of January 2015 had been 37 percent higher than those during the same period of last year. While the overall industrial growth in demand had been 24 percent higher than that of last year. PSO's sales were higher than those of any other OMC, while several oil marketing companies (OMCs) recorded a negative growth as shown above. "The sales pattern also depicts the effects of falling prices... whereby the demand is relatively higher during the early days of the month subsequent to price announcement and tapers off towards the latter part of the month in anticipation of the next price drop," they said.
A shortfall in availability of locally refined product had impeded the supply response to the demand growth, the PSO official viewed. This scarcity, they opined, was mainly due to an "unplanned" shutdown of the major local refinery, PARCO, for a few days due to a power failure. Moreover, they said, its efforts to cope with the demand surge were also impeded by the PNSC. The national shipping line, the officials claimed, supplied vessels for the transport of fuel later than what was agreed upon.
A vessel bringing in 52,000 tons of Mogas was to be provided by the PNSC for loading on 2-4 January. However, it arrived at the loading port on 10 January, they claimed. Similarly, they said, another vessel due to arrive at the loading port on 5th January was able to arrive on 15th. "PSO has been facing difficulties due to the Contract of Affreightment between PSO and PNSC and since the matter is under litigation, PSO has to rely on PNSC for the imports on FOB basis until the issue is resolved," they said.
The official, however, said the company had inducted further vessel which was expected to go on loading on 18th of this month at Oman port and was expected to arrive at Karachi on 24th. "This should help build petrol stocks in the country," they said. Giving a broader view, the official said the PSO's sales and procurement during October 1, 2014 and January 15, 2015 stood at 603,000 MT against 520,000 MT and 58,2000MT and 55,8000MT, respectively.
The state supplier, the officials said, was trying to ensure maximum petrol dispatches to the upcountry locations. "All filling operations are being run 24/7 including Sundays to ensure maximum fuel dispatches through tank lorries," they said. There is enough product in transit to meet the daily sales requirement of Lahore, Faisalabad and south Punjab which should start arriving anytime soon, they added.
The PSO is breathing hard under the lingering circular debt issue as the otherwise profitable state-run oil giant is running with a huge outstanding dues of over Rs 200 billion, mostly against the power sector. The company immediately needs Rs 75 billion from the federal government which Thursday released only Rs 17 billion, described by a PSO official as "peanuts".