Experts advocate steps to increase reliance on indigenous fuel sources

ISLAMABAD: Energy experts have proposed to the Planning Division and the Petroleum Division measures to increase reliance on indigenous sources of fuel such as furnace oil and that lower fuel consumption helps to reduce the import bill.

In their proposal, it is argued that restrict the RLNG use for power generation by maximizing the use of furnace oil, make local furnace oil a must-use product for power generation round the year and remove it from the merit order calculation to permit its use at those power plants that operate on furnace oil. Around 3,000MW of electricity can be generated from local furnace oil.

It is said that those measures would assist the local refineries to operate close to their maximum capacity thereby producing more gasoline and HSD and reducing their imports.

Estimated annual savings due to this measure, based on year 2020-21 imported crude and product cost, and incremental value addition of five percent, will come to around Rs35 billion.

At current prices, the impact will be even higher in the range of Rs55 billion. Those advocating to keep merit order considerations for FO must also account for these savings in their calculations in order to get the whole and not a one-sided picture.

“Our local natural gas resources are already seriously compromised: We have consumed ~70 percent of our natural gas reserves. Unbridled consumption of CNG and ever-increasing imports of expensive RLNG are overburdening our already compromised financial well-being. We import almost 85 percent of our crude oil and 70 percent of our gasoline and 50 percent of our HSD needs. Our local refineries have been operating at close to or less than 60 percent over the last few years: Reduced lifting of furnace oil by OMCs/power plants was the main reason. Some refineries also shut down in November /December 2021. Shutdown of a local refinery not only leads to lower availability of refined product but also directly impacts local oilfield production and that of Associated Gas (especially for ARL, which is solely dependent on local crude),” the proposal says.

Copyright Business Recorder, 2022