KARACHI – The Pakistan State Oil (PSO) has refused to provide furnace oil to the Karachi Electric Supply Company (KESC) until the power utility pays up the price differential claims of Rs 3.9 billion made by the former.
Moreover, a clear directive from the federal government is also needed to provide the facility of subsidised furnace oil to the KESC, which is demanding oil on the rate of gas, after a reduction in gas supply from the Sui Southern Gas Company (SSGC) to the power company.
On Friday, official sources in the PSO claimed that the credit line of KESC was increased to at least 80,000 metric tonnes (MTs) per day from an already enhanced supply of 50,000 MTs on normal rates.
The PSO had recently increased the KESC’s credit line from 33,000 MTs to 50,000 MTs of furnace oil, after a drastic reduction in gas supply to the KESC from SSGC due to the closure of Bhit gas field for the past few days.
The supply of subsidised furnace oil to the KESC will cost the PSO at least Rs 155 million a day, and the company, facing a circular debt of Rs 172 billion, is not able to give further oil at gas rates.
“The PSO shall not give subsidised furnace oil (at gas rate) to the KESC as no directive from federal government has been issued,” the sources said.
Furthermore, the oil company has requested the government to order the KESC to pay up its price differential claim for getting subsidised fuel in 2009 and 2010 that amounts to over Rs 3 billion.
In the absence of credit facility and reduction in gas supply, the KESC has resorted to nine hours of power load shedding in the city besides also increasing the duration of power outages in the industrial areas.
The power utility wants to enjoy the facility of subsidised furnace oil at gas rate, as it was facilitated last year after an energy summit in Islamabad.
Last year, in order to compensate the reduction in power supply from Water and Power Development Authority (WAPDA), the government had facilitated the supply of additional 1,600 tonnes per day furnace oil to the KESC. The government had paid the extra cost of fuel from its own account in order to avoid further burdening the citizens.
The sources claimed that although the supply of 650 megawatts from WAPDA resumed, the KESC was demanding the same facility again this year, to compensate for the reduction of gas from the SSGC.
