PSO urges Power Div to revisit furnace oil demands

Pakistan State Oil (PSO) has urged Power Division to revisit furnace oil demand for the month of October 2022, keeping in view considerable variance in demand and upliftment in September 2022, well informed sources told Business Recorder.

PSO, in its three letters written in May, June, July and August 2022, had firmed up its supply plan in line with Ministry of Energy (Power Division) demand/ customer demand for May,2022 to August, 2022 periods. However, the actual upliftment by the power plants has been significantly less in comparison to Power Division demand, as well as, customer demand during this period.

During this period, only 545,000 MTS product has been uplifted from PSO against supply plan of 1,044,000 MTs with shortfall of approx. 400,000 MTs whereas Power Division demand for this period was 1,406,000 MTs. As a result, PSO has been facing severe ullage issues to offload its cargoes causing excessive demurrages and upliftment from refineries has also been badly affected in addition to the cash flow issues faced by PSO.

The sources said in the view of demand and upliftment scenario and the demand received from Power Division and customers, PSO has also firmed up its supply plan for the month of September, 2022. Based on available fuel oil stock, local refinery avails and previously awarded two HSFO cargoes (deferred from August first fortnight to end of August and September first fortnight respectively) PSO has not awarded any additional HSFO or LSFO cargoes for the month of September, 2022.

Based on the existing considerable variance in demand vs upliftment during this period, PSO has requested to revisit the plant wise RFO requirement shared for the month of October, 2022 in its letter of August 25, 2022. “PSO has sought response / update from Power Division in this matter for RFO requirement with plant-wise break-up for Nov 22 – Dec 22, enabling PSO to firm up its supply plan accordingly keeping in view of import cycle of minimum 60 days.

PSO scraps HSFO delivery tenders

Accordingly, PSO’s tentative HSFO/ LSFO supply plan September, 2022 for its contractual customers is as follows: Hubco’s demand was 80,000 MT whereas Power Division demand was 10,910 MT which is being met.

The demand from Lalpir/ Pakgen was 58,000 MT against demand of 71,400 MT of Power Division; however, PSO will supply 58,000 MT. Furnace oil demand of Kohinoor Energy was 9,000 MT whereas Power Division forwarded demand of 16,374 MT. PSO has met demand submitted by the power plant (customer). PSO will supply 5,000 MT to Muzaffargarh (Genco III) and 10,000 MT to Jamshoro (Genco 1).

Of the PSO’s non-contractual customers, Saba Power is receiving 8,000 MT against Power Division’s demand of 4,200 MT, Liberty Power Tech Limited, 5,000 MT against Power Division demand of 20,663 MT, Nishat Power Chunian, 6,000 MT verses 21,276 MT demand forwarded by Power Division, Nishat Power Limited 5,000 MT against Power Division’s demand of 18,673 MT.

The sources maintained that total demand of HSFO placed by customers was 181,000 MT, against Power Division demand of 163,000, whereas PSO will supply 116,916 MT. The demand from Kot Addu Power Plant (KAPCO) was 140,000 MT whereas PSO will supply 60,000 MT despite demand of 44,850 MT placed by Power Division. KAPCO cancelled cargoes of first and second fortnight for the month of September.

Total demand of PSO’s RFO was 321,000 MT for September whereas PSO will supply 176,916 MT against demand of 208,352 MT placed by the Power Division.

PSO only supplied approximately 91,661 MTs against the revised supply plan of approximate 188,164 MTs with a shortfall of approximate 96,503 MTs during the month of August, 2022 due to upliftment/ order placement and delay in payments from various power plants. As a result, PSO has been facing ullage constraints to offload its cargoes, and upliftment from refineries was also affected.

PSO maintains that tentative supply plan for September is subject to timely payment or orders from respective Genco’s/ IPPs. Any deviation from this will affect supplies to customers. PSO maintains that customers receipt may vary from daily plan due to transit time. Supplies from Karachi have 2-3 day transmit time. In addition to tentative supply plan, K-Electric has placed firm demand of 116,000 MTs for the month of September, 2022.

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