CCoE Bans Import of Furnace Oil for 3 Months

import of furnace oil

An inquiry has been started by the Cabinet Committee on Energy (CCoE) about the breach of economic merit order of the use of oil in power plants. It has banned the import of furnace oil for a span of 3 months.

The CCoE was led by the Minister for Petroleum—Ghulam Sarwar who explained that the 2nd LNG terminal was performing its operations at less than its optimal capacity since power plants were performing on furnace oil instead of operating on liquefied natural gas (LNG) which cost much less and has breached the merit order.

Additionally, it was informed that the power sector had asked for 800 mmcfd of LNG, however, have used only 230 mmcfd and the Power Division shared the figures of the fuel being used for generating power by plants.

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The CCoE directed the Power Division to share more details regarding the use of various fuels in power plants.

In reply, the Power Division said that power plants had been using furnace oil and not LNG, which was much less costly fuel.

Hence, the CCoE banned the imports of furnace oil and instructed that the locally manufactured furnace oil be used in the power plants.

The power produced by the power plants using furnace oil costs around twelve rupees per unit against nine rupees per unit with a three rupees per unit differential, resulting in putting a burden on the consumers with billions of rupees.

Accordingly, the committee on energy concluded that the must operational power plants should run in the order of merit and directed the Petroleum and Power Division to plan the import and usage of LNG.

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