ISLAMABAD: The petroleum division has so far failed to lift the country's refineries out of the crisis that prompted them to operate with low throughput due to rising stocks of furnace oil in their storages, a senior power ministry official said. Told The News.
Federal Minister for Energy Hammad Azhar on January 6, 2022 asked refineries to provide subsidies on furnace oil prices, to enforce use of the product for power generation. Furnace Oil at a discounted price will enable the Government to match the Economic Merit Order.
Under the Economic Merit Order (EMO), power plants using the cheapest fuel are run first. And those power plants that run on furnace oil come in second place in the EMO because furnace oil prices are higher than the price of LNG, which is used in LNG-based power plants. And the cost of fuel is a pass-through item for end consumers.
Diesel-powered power plants produce invaluable electricity, which is why plants based on diesel are at the forefront of the economic merit order. However, local refineries had previously opposed, according to official correspondence available with The News, the government's proposal to discount furnace oil prices for use in power plants on the grounds that lowering furnace oil prices was not a viable proposition. Was. This has further aggravated the treatment crisis at the refineries.
However, in a new development, the official said, the power division has constituted a committee under the chairmanship of PARCO's managing director, with the lead role to interact with its counterparts at other local refineries badly hit by the crisis. Looking for solution. Keeping in view the proposal of Ministry of Power affected the production of refineries. The power division will also be asked to hold talks with the committee of refineries regarding relaxation in furnace oil prices.
Earlier, Pakistan Refinery Limited (PRL), National Refinery Limited (NRL), Attock Refinery Limited (ARL) and BYCO had rejected the government proposal to reduce furnace oil prices, calling it not a suitable solution to the issue. Was. Does not address the issue of sustainability of refineries.
However, based on the directions of the meeting held on 06 January under the chairmanship of Energy Minister Hammad Azhar, PARCO in response to DG Oil's letter offered furnace oil price of Rs 86,000 per tonne.
Similarly, National Refinery Limited has fixed the price of furnace oil at Rs 81,000 per tonne. Pakistan Refinery Limited came up with a price of Rs 80,000 a tonne and Kanergico (Bioco) at Rs 86,000 a tonne. All refineries refused to give further discount on furnace oil prices.
Since then, no progress has been made and now the Petroleum Division has, as per the wishes of its Secretary, headed by MD Parko to hold talks with its counterparts and representatives of Power Division to reach an acceptable furnace oil price for both. A committee has been constituted in Party.