Pak-Arab Refinery Limited (PARCO) has received Rs72,000 per tonne bid for export of its high sulfur fuel oil (HSFO) against the ex-refinery price of Rs86,000 per tonne, The News learnt on Tuesday.
PARCO floated the tender for sale of its HSFO, which the company has started to store at Port Qasim for export purposes.
It has stored 46,000 tonnes of HSFO at Port Qasim for export. Its stocks piled up because independent power producers (IPPs) were not buying the commodity for the last several weeks.
“Company plans to store 50,000 metric tonnes at Port Qasim, and is trying to export the stock to keep the refinery operational,” revealed sources in the oil sector.
PARCO would go for disposing of this stock despite the bid price being much lower than its ex-refinery price, sources informed.
Bid price is Rs72,000/tonne, whereas the ex-refinery price is Rs86,000/tonne, which, along with the transportation cost of Rs5,000/tonne increases the gap to Rs19,000/tonne for PARCO.
It should be recalled that PARCO reduced the ex-refinery price of HSFO from Rs92,000/tonne to Rs86,000/tonne last week in order to dispose of its stock.
Sources said that disposing of HSFO at lower price would result in financial loss; however it was necessary to keep the refinery operational.
“The refinery is now running at 85 percent capacity and if HSFO stock was not stored at Port Qasim and not sold it would end up in halting the operations,” disclosed sources.
They added that keeping the refinery operational was necessary, especially for the production of JP-I and JP-VIII for aviation purposes along with the production of petrol, diesel and other products for domestic consumption.
Sources also rejected the reports that IPPs have started lifting HSFO from the refineries and said that the situation was same and no improvement has been seen in disposing of HSFO stocks at the refineries.
Pakistan Refinery Limited, Cnergyico Pak (formerly Byco ) and National Refinery Limited (NRL) had shut down operations last month due to diminished demand for HSFO.
However, PRL started its operation a day earlier. “We have started the operation, but will wait for the next 10 to 15 days to see the buying of HSFO stocks… and if the situation does not improve, we can go for another shut down,” a top executive of the company said.
