Refineries' imminent closure

Domestic oil refineries have warned the government that its stated policy to furnace oil with gas as fuel for power plants in the public and private sector en masse would lead to imminent closure of refineries. The reason: with the decline in demand, refineries' storage capacity is maxed out. An official of the Petroleum Division reportedly acknowledged that refineries at present are running at 70 to 75 percent capacity with their storage tanks full, at capacity.
The government's rationale for such a policy is evident - to reduce the cost of electricity generation by using a cheap fuel as input which would enable it to reduce the tariff on electricity that would, in turn, enable the productive sectors to compete internationally as well as domestically (given the scale of smuggling activity across our large porous borders). Critics of the incumbent prime minister and the former minister for Petroleum and Natural Resources Shahid Khaqan Abbasi who negotiated a 15-year controversial Liquefied Natural Gas (LNG) deal with Qatargas signed in February 2016 maintain that this directive was issued by Abbasi as the country's Prime Minister to not only ensure that (i) the country does not pay a penalty as agreed in the deal itself wherein Pakistan would have to pay for a stipulated quantity whether it was delivered or not; but (ii) if Qatargas is informed within a stated period that Pakistan does not require a cargo then it would find an alternate party though it would bill Pakistan the difference between the invoice and the rate agreed with the alternate buyer.
Unfortunately though in its zest to use LNG instead of furnace oil the government cannot afford to ignore the fact that the major consumer of locally produced furnace oil is the power sector and if the refineries are unable to sell their furnace oil production they would have to shut down their operations that would then necessitate import of HSD, motor spirit and other refined products. The Abbasi administration would be well advised to take note of the fact that an oil refinery is a process plant where crude oil, largely imported, is processed and refined into not only furnace oil but other products that include liquefied petroleum gas, gasoline, naptha, kerosene/jet aircraft fuel, diesel fuel, lubricating oils, paraffin wax, asphalt and tar and petroleum coke. In addition, oil refineries produce intermediate products that include hydrogen, light hydrocarbons, reformate and pyrolysis gasoline that are then on sent to chemical plants, often adjacent to refineries, where chemical processes are further integrated into products. Thus in the event of refineries' closures these products would also cease to be locally produced which in turn would imply that the government would have to import them.
It is extremely unfortunate that the PML-N government has consistently taken such knee-jerk decisions that account for the pervasive perception that governance has never been as poor as during the tenure of the current political dispensation. Other examples of poor judgement by the PML-N government include the losses incurred by Pakistan International Airlines with major routes being given up recently (New York), Pakistan Steel (which has been non-operational for over three years but continues to receive large bailout packages to pay for the employee salaries) as well as the decision to invest massive sums of borrowed money into generation while ignoring the fact that the problem has not been capacity but capacity generation inclusive of bottlenecks in delivery (transmission and distribution systems).
To conclude, there is an emergent need for the Abbasi administration to review its decision pertaining to abrupt replacement of the type of fuel in electricity generation and, instead, to take a more informed decision that takes account of all elements of the decision.