Inside Financial Markets

Furnace oil, LPS: PSO accuses ministry of not paying agreed amount

Pakistan State Oil (PSO) has reportedly accused Ministry of Water and Power of not paying the agreed amount against furnace oil supply and Late Payment Surcharge (LPS) as well as supporting a review of the furnace oil consumption for thermal power plants due to a lower demand, well informed sources in Petroleum Ministry told Business Recorder.

PSO claims that it firmed up its import plan and is maintaining uninterrupted supplies to the power sector customers In line with demand. A summary of dispatches along with stocks/days cover besides giving the presently available fuel oil with PSO reveals that PSO supplied 160000 tons of furnace oil against a demand of 159000 tons, Kapco received 58000 tons against a demand of 68000 tons, Thermal Power Station (TPS) Muzaffargarh received 1944000 tons against a demand of 170,000 tons and TPS Jamshoro received 50,000 tons against a demand of 25000 tons. However, Combined Cycle Power Plant (CCPP) Nandipur has not been supplied furnace oil despite a demand of 57000 tons as the plant was not operative.

According to PSO, it’s a matter of concern to note that zero upliftment by CCPP Nandipur from September 2 to entire October 2016, has impaired the daily supply rate. The sources said, as per the directives of Joint Secretary Water and Power (NTDC) in order to match the daily supply rate of 16,000 tons for October 2016, supplies were enhanced to TPS Muzaffargarh and TPS Jamshoro. This resulted in a considerable increase in stocks of both plants.

Except for Kapco, where there is sufficient ullage to meet the demand of November 2016, other power plants are carrying high inventory. However, present consumption pattern is of concern to PSO as it is expected that daily supply rate of 165000 tons for November 2016 given by Ministry of Water and Power could not be made due to a lower demand, the sources added. “Under the circumstance when PSO has already firmed up its import plan and cargoes are to arrive as per schedule, it is imperative that dispatch load of power plants should get synchronised through National Power Control Centre (NPCC) for an increase in fuel consumption as this is required to arrange continuity of supplies and create ullage at Karachi for incoming cargoes and to avoid demurrages,” the sources continued.

Moreover, PSO has requested Ministry of Water and Power to review the enhanced projected daily target from December 2016 to June 2017 @ 20,000 tons per day (minimum 18,000 tons) in view of variation in consumption demand pattern. PSO has also referred to a meeting held in the office of Joint Secretary Ministry of Water and Power (Power Finance ) Zargham Eshad Khan last month wherein PSO’s then overdue balance of Rs 5 billion against supplies for under seven days credit arrangement was discussed.

Baqar Hussain

A Wannabe CFO, just had stepped in the corporate sector, willing to explore every aspect here and learn as mush as i can, awareness for those who dont, get the info where ever possible and stay up to date always.

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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)