Eradicating confusion in power sector: Dr Asim devises new mechanism

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ISLAMABAD: The Ministry of Petroleum and Natural Resources in order to remove the uncertainties related to the price fluctuation and the quantity of furnace oil required by the power sector devised a new mechanism to eradicate such lacunas and confusion between the power sector, Pakistan State Oil (PSO) and the Finance Ministry.

In this regard, Petroleum Minister Dr Asim Hussain has written a letter to the finance minister and the minister of water and power telling in detail about the new furnace oil supply mechanism.

“The system requires public sector power generation companies (GENCOs), KAPCO and Hubco to send their indents with acceptable price for supply of oil by PSO through the Ministry of Water and Power, duly endorsed by the Finance Ministry,” the letter said.

Dr Hussain has said the price of furnace had been a bone of contention between the stakeholders in the past and that is mainly because the prices keep changing continuously.

The letter has also recommended the Ministry of Water and Power to direct GENCOs to initiate a tendering process too as it would remove doubts about the competitiveness of the prices.

“We require 45 days notice of indent to order furnace oil and the Ministry of Water and Power needs to provide storage facility for the furnace oil,” the letter said.

The petroleum minister had also pointed the indents for furnace oil forwarded by the Ministry of Water and Power on daily basis was not reasonable and it was based on short-term and immediate-term basis.

“We need a system to ensure supplies and to make timely payments to the international suppliers,” Dr Hussain said.

However, in an earlier meeting in this regard held last week the Ministry of Water and Power had expressed discomfort with the suggestions to alter the current ongoing arrangement.

The official of the Ministry of Water and Power acknowledged that the PSO was supplying around 15,000 tonnes of furnace oil to the GENCOs on daily basis, which has resulted in reduction of load shedding in the country.

Currently the peak electricity demand in the country was 13,797 megawatts (MW), whereas the generation was around 11,653 MW, as a result the system was facing 2,144 MW shortfall, which is very low as compared to the previous months.

However, the pricing issue was more related with the release of subsidy amount by the Finance Ministry.

“We are not in a position to float tenders for the supply of furnace oil due to weak financial condition,” the official said, “This is a complicated matter and as long as the Finance Ministry is not regular in releasing the subsidy amounts the GENCOs will not be in apposition to purchase furnace oil in time.”

End.