Local refineries have started exploring the options to export high sulfur fuel oil (HSFO), with Pak Arab Refinery Limited (PARCO) becoming the first one to invite bids for the purpose this season.
During the last few weeks, HSFO stock started piling up at the local refineries after power plants refused to procure the commodity for power generation due to falling consumption of electricity in the country. Presently, the total HSFO stock stands at 490,000 tonnes.
PARCO invited the bids for the export of HSFO and started shifting the stock to a storage near Karachi’s Port Qasim area for its onward shipment in case of successful bids from the foreign parties.
The refusal of power plants to lift HSFO not only compelled PARCO to explore the option of exporting it but other refineries were also suffering from the accumulating stocks of HSFO in their respective refineries, sources in the oil sector told The News on Monday.
Pakistan Refinery Limited also has a huge stock of HSFO and has been left with only three more days to store HSFO in its premises. After three days, it would be compelled to shut down the refinery if the stock was not lifted by power plants or it did not make the arrangements to store it somewhere else.
Cynergyico is also suffering from the accumulating stocks at its refinery. Last month, the Power Division refused to collect furnace oil (FO) from local refineries for power plants if they did not come on the merit list after refineries approached the government about increasing stocks of HSFO.
Power Division refused to lift the FO for power plants, which did not come in the merit list, which was devised to go first for the cheap source of power generation. During the meeting, refineries were also asked to explore the option of exporting furnace oil, but no agreement was reached on the suggestion as representatives of the refineries considered it a financially unviable option; however, now the refineries were opting for this option, if it fetched a good price for them.
According to the oil sector officials, piling up of furnace oil stocks was leading to low production capacity at local refineries, which might cost the government dearly in terms of the loss of foreign exchange.
Due to low power generation on HSFO, the sale of FO plunged by 26 percent in the first five months of this fiscal against the same period of last fiscal, and by 22 percent in the month of November of this fiscal compared to the same month of last year.
