National Refinery Limited (NRL), a subsidiary of UK-based Attock Oil Company, has announced to temporarily shut down its production plants due to a lack of demand for furnace oil and surplus reserves.
The development comes amid rising furnace oil imports by the Independent Power Producers (IPPs) and Oil Marketing Companies (OMCs) instead of procuring it from the local refineries.
Speaking in this regard, a senior executive of NRL disclosed that 5,000 tons of furnace oil is being procured from the refineries in the country daily while more than 200,000 tons of furnace oil is present in their reserves, which has forced the refineries to halt operations temporarily. It could take several weeks to clear the current reserves and the refineries would resume operations after that.
The executive said that the government is also at fault for worsening the crisis by ordering PSO to import furnace oil despite sufficient reserves at home. This highlights the glaring disconnection between different government departments as well as the lack of planning in each department.
The executive implored the Petroleum Division to urgently intervene in this matter and order PSO, IPPs, and OMCs to restore procurement of furnace oil from local refineries to previous levels in an attempt to ensure their optimum output and prevent them from a permanent shutdown.
The reserves of furnace oil in refineries have been piling up for weeks and NRL is the third oil refinery to halt its refinery operations this month, sparking fears of severe petrol, high-speed diesel, and jet fuel shortage in the coming days.
Earlier this month, Pakistan Refinery Limited (PRL) and Byco Oil Pakistan Limited (BOPL) had also shut down operations due to the shortage of storage capacity as a result of decreased furnace oil demand. Attock Refinery Limited (ARL), Pakistan’s oldest petroleum refining company, had also warned to close its production units due to the same issue.
It is worth mentioning here that despite being legally bound to maintain a furnace oil inventory for 30 days to fulfill their needs, IPPs and OMCs are only keeping a stock of just 8-10 days and a big portion of it consists of imported furnace oil.
