Transportation of HSD: APL proposes to repurpose its Hub-ZOT pipeline

ISLAMABAD: Asia Petroleum Limited (APL) has proposed repurposing its pipeline to transport High Speed Diesel (HSD) from Hub to Zulfiqarabad Oil Terminal (ZOT) and from there to upcountry through the White Oil Pipeline System (WOP) as Hubco is consistently on low in merit.

In a letter to Petroleum Division, Babar Hamid Chaudhary, MD/ CEO APL referred to the Implementation Agreement (IA) of June 28, 2003 between the President of Pakistan (GoP) and APL and the meeting on February 7, 2023 during which this matter was discussed in detail.

APL is an energy infrastructure company which owns and operates an oil terminal (mainly comprising of pumping and heating facilities) and an 82-km pipeline system extending from Pakistan State Oil Company Limited’s (PSO) Zulfiqarabad Oil Terminal (ZOT) at Port Qasim Karachi to the Hub Power Company Limited (Hubco) Complex at Hub Balochistan

PL on HSD to go up by Rs5/litre

The Pipeline was constructed to transport the Residual Fuel Oil (RFO) requirements of Hubco (the first independent power project established in Pakistan) from ZOT to enable PSO to meet its RFO delivery commitments under its Fuel Supply Agreement with Hubco (FSA). Under the arrangements, APL’s role is limited to transportation. The pipeline operates under a security package of documents (APL Security Package) including the IA and a Fuel Transportation Agreement (FTA) with PSO. The initial term of these documents and of PSO’s obligations to supply RFO to Hubco are scheduled to expire in March 2027.

CEO APL further elaborated that the pipeline is currently dedicated to the movement of RFO to Hubco but given the dwindling use of RFO and increasing preference given for more cost-effective power generation options, Hubco has, over the last few years, consistently been low on the merit order and so its dispatch is very low and is likely to remain so. This means that the pipeline, which provides a safe environmentally friendly and efficient link between Hub, Balochistan and ZOT is seriously underutilized and often idle which is unconscionable for such an important strategic asset. While the APL Security Package does contemplate supply to other parties, given the dwindling use of RFO and lack of alternate RFO customers in the area, it is not feasible to use the pipeline for supply of RFO to other parties in the vicinity.

Copyright Business Recorder, 2023