Pakistan State Oil (PSO) on Saturday proposed the power generation companies (Gencos) to enter long-term fuel supply agreements (FSAs) with PSO and ensure settlement of PSO monthly outstanding amount in the subsequent months.
Managing Director PSO Irfan Qureshi while speaking at a press conference here said that the insufficient funds available with Pakistan Electric Power Company (Pepco) and Independent Power Plants (IPPs) was affecting the supply chain and operations of power plants and PSO.
He pointed out that PSO''s total receivables are over Rs 62.667 billion. The company has receivables Rs 14.823 billion from Wapda, Rs 29.478 billion from Hubco and Rs 14.713 billion from Kapco while Rs 3.653 billion is receivable in account of LSFO-HSFO current differential claim. An additional amount of Rs 3.4 billion is receivable from the government of Pakistan on account of PSO''s old LSFO-HSFO differential claim.
PSO proposes payment of Rs 500 million per day by Pepco until the entire outstanding is cleared. He said the government is seriously working to improve the situation. The Prime Minister had constituted a committee on July 21, 2009. The committee besides asking gas utilities to maximise supplies to power sector, instructed PSO to supply 35,000 MT/day to Gencos and IPPs.
He said that PSO has the capability to move up to 35,000 MT/day on the basis of 25 working days per month. "We could increase supply up to 39,000MT/day if operating three shifts/day," he added. He was of the view that the power plants should be run on gas as the fuel oil prices will rise substantially in future.
He said the infrastructure constraints have limited the capacity of PSO to meet increasing demand for fuel oil. It happened at a time when shortfall in hydropower production shifted more reliance on thermal power generation. He said that Gencos should build up stocks at sustainable level of at least 10 days cover at full load. IPPs should build their inventory as per their contractual arrangements with PSO.
He suggested enhancement in the capacity of Pakistan Railways to transport furnace oil, expansion in current tank lorry fleet and to improve decantation arrangement at Gencos especially for winter season. Regarding root causes of low stocks at power plants, he said, it is evident from the fuel oil storage capacities that despite having more than 1.1 million tonnes storage the thermal power plants are operating at very low stocks.
The reasons being non-payment of Wapda bills by consumers and Wapda in turn not paying IPPs for the energy generated and at the same time it is unable to procure the required fuel oil from PSO. IPPs such as Hubco and Kapco are not paying PSO for the supplies and remaining IPPs do not have funds to buy fuel from PSO thus exposing the country to extended loadshedding and public outcry, he added.
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