He said that closing down the oil based power plants will lead to shutting down of local oil refineries which are producing 20 to 40 percent fuel. He further revealed that it was not for the first time that the government closed down the furnace based power plants without prior notices to the refineries. In the past, the government closed oil based power plants due to circular debt, without giving enough time to refineries to reduce the capacity.
The OCAC is protesting against the decision taken without prior arrangement for product uplift and Pakistan State Oil (PSO) fears to pay up to $25000 per day on account of demurrages following decision of the government to ban use of furnace oil in power plants.
The PSO is already facing financial constraints due to circular debt. It awarded contracts of furnace oil worth millions of dollars and the government suddenly imposed ban on use of furnace oil in power plants. The PSO had already placed orders and it would lead to critical situation if ban on furnace oil is not uplifted. The PSO had placed orders for seven ships following the directives of government to line up furnace oil imports till December 2017 to meet the demand of power plants. One ship had been offloaded whereas six more ships are in the pipeline.
Under the directions of federal government, the power sector has also closed all expensive furnace oil/diesel run power plants of a cumulative capacity of 4250 MW. The furnace oil plants include 950MW Hubco, 1000MW Muzaffargarh, 400MW Jamshoro and 700MW KAPCO. The diesel/furnace oil fired plants which are closed under the directions are Nishat Power, Nishat Chunian Power, Liberty, Hubco Norwal, Atlas and Kel, of cumulative capacity around 1200MW, stated in press release issued by Ministry of Energy on 3rd November.
Copyright Business Recorder, 2017