Furnace oil (FO) stocks have risen to 632,000 MT as power plants refuse to stockpile the fuel amid poor export feasibility due to its low global market price.
Fuel oil stocks have been building up since the beginning of last winter when power demand fell. Power plants are still not lifting boiler oil because the majority of electricity is generated by hydel and nuclear sources, which has reduced the demand for fuel oil for power generation, reported a national daily.
Refineries’ attempts to export furnace oil, on the other hand, were unsuccessful due to the low price. Refineries determined that exporting FO was financially unviable because it would eat into their profits if the fuel was exported at a low price on the international market.
Combined 632,000 FO stocks include 539,080 MT of useable stocks and 93,147 MT of dead stocks. The oil marketing companies (OMCs) currently hold 203,879 MT of furnace oil stocks. The country’s power sector has 202,280 MT of fuel oil stocks, accounting for 33 percent of total stocks, while local refineries have 220,068 MT, accounting for 35 percent of total stocks.
PARCO has 116,004 MT of FO, National Refinery Limited (NRL) has 32,327 MT, Pakistan Refinery Limited has 44,455 MT, Attock Refinery Limited has 16,826 MT, and Cnergyico has 10,457 MT of FO stocks.
The current FO stock is massive, putting local refineries’ operations at risk by interfering with their operational capacity. PARCO exported 60,000 MT of FO and PRL exported 25,000 MT, but the export price was not profitable. The price in the global market is on the lower side and it can cause financial issues for the refineries if the stocks are exported at low prices.
The situation is unappealing for local refineries as well, as power generation from FO fell by 80 percent in February compared to the same month last year and in the first eight months of FY23. Electricity production from FO has also decreased by 50 percent compared to trends observed in the corresponding period last year.
During the months of April to SeptemberÙ« when power demand will peak up, this stock of furnace oil will be consumed rapidly. Govt may consider reducing duties and levy on FO, it will ease the consumer in FAC for electricity bills in summer months. Reducing electricity prices through fuel cost will support domestic user and industrial consumer and support in speeding the economic activities.
They ate all deemed duty for refineries upgrade to crack this bottom of the barrel & now shedding allegators tear. The Govt. Should not show mercy this time & let them bear this cost caused by their own hand & greed. The simple solution is to import the refined products as per country’s demand.