Govt. likely to rescind ban on Import of Furnace oil

According to sources petroleum Division has received furnace oil demand of about 1.17 million tons from the Power Division for the period from April to August, 2019 for operating as well as stocking requirements. K-Electric has also placed a demand of around 0.6 million tons for April to August, 2019. It is possible that in order to meet the increasing requirement of furnace for power generation the Cabinet Committee on Energy (CCoE) might decide to rescind ban on furnace oil.
On December 5, 2018 the CCoE headed by Chairman Ghulam Sarwar khan had imposed a ban on the import of furnace oil for the purpose of power generation to encourage consumption of domestically produced oil. At the time the domestic refineries had furnace oil in access of 200,000 tons. Keeping in view the furnace oil production by local refineries / available stocks of RFO in the country, the net deficit of furnace oil works out to around 0.5 million tons, which can be imported if the ban is lifted.

The Petroleum Division has submitted the two following proposals for future course of action in furnace oil import: (i) the ban imposed on furnace oil import may continue. Accordingly, Power Division may be directed to cater its demand for power generation alternate sources; or (ii) PSO may be allowed to import 0.5 million tons of furnace oil to cater to the Power Division and KE demand subject to some conditions.

The proposed conditions are as follows: (i) all cargoes will be imported on C&F basis;(ii) five cargoes may be imported for May 2019, through Gallop Tender;(iii) three cargoes may be imported during June 2019 as per normal tender process in accordance with PPRA Rule 2004;(iv) Power Division may also be directed to release Rs 30 billion to PSO as an advance payment to procure furnace oil to cater the Power Division’s demand; and (iv) Power Division may be directed to uplift product as per their demand so that local refineries operation are not affected.