Govt Might Remove the Ban on Furnace Oil Import in Pakistan

furnace oil import

The Cabinet Committee on Energy (CCoE) is most probably to lift the ban on the furnace oil import for meeting the demand of the power sector during the summer season after placing a ban on the demand of the local refineries, as per the sources close to the Petroleum Minister informed.

The sources said that the CCoE in the month of December last year places a ban on the import of furnace oil for the purposes of power generation. This directive was later changed by the CCoE twice in the meetings conducted on the 26th of December 2018 and 8th January 2019.

The Petroleum Division has now got the furnace demand of nearly 1.17million tons from the Power Sector for the period of April to August 2019 for operational and stocking needs.

Additionally, the RFO demand by the Power Division, K-Electric has also placed a demand of nearly 0.6million tons for the month of April to August 2019.

Keeping in consideration the furnace oil need by the local refineries in the country, the net deficit of the furnace oil functions out to nearly 0.5million tons, which could be imported once the ban is lifted.

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The Petroleum Division urged that before the ban placement by the CCE, the furnace oil imports by the Pakistan State Oil (PSO) used to be arranged on Freight on Board (F0B) basis by transporting via the Pakistan National Shipping Corporation (PNSC), under a Contract of Affreightment (CoA) between the firms. But, owing to the long outstanding problems pertaining to the CoA between the two parties, Petroleum Division had referred the issue to the ECC of the Cabinet in the month of May 2018 for ending the CoA with PNSC and the resumption of furnace oil imports on the basis of C&F via an opening bidding process. The ECC in its decision on the 17th of May 2018, decided that PSNC and PSO should resolve the issue with consent at their own level without referring it back to the ECC.

The Petroleum Division has presented 2 proposals for the future line of action in furnace oil import:

  • Ban on the import of furnace oil to continue. Power Division may be instructed to look after its power generation demands from other sources
  • PSO may be permitted to import 0.5million tons of furnace oil for looking after the Power Division and KE demand subjected to some conditions

On the condition of anonymity, an official told that oil and gas mafia was involved in the crisis of oil and gas some months back. The same mafia is now actively seeking the permit for importing furnace oil.

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