ISLAMABAD: With the Pakistan State Oil (PSO) overstretched in fuel supplies on credit, the government asked the Indus River System Authority (Irsa) on Monday to be generous with water discharges to help contain an unending electricity shortage.

At a meeting presided over by Finance Minister Ishaq Dar and attended by all stakeholders, including from ministries of water and power, petroleum and natural resources and PSO, it was pointed out that PSO’s receivables had touched Rs179 billion, despite payments of about Rs40bn during June.

This has simply put PSO in a difficult situation because it is not getting payments from state-owned power companies and independent power producers (IPPs) though they require maximum fuel supplies at this peak time of the year.

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A strong move by the ministry of water and power to virtually close down CNG stations for diversion of 50MMCFD (million cubic feet per day) natural gas to the power sector was not entertained by the finance minister who was more concerned with political backlash.

The gas diversion to the power sector would also have required some withdrawals from the industrial sector along with the CNG stations. Hence it was difficult to open two fronts of agitation when the power generation would have increased by a maximum of 300MW.

The management of PSO made a presentation on fuel supply and liquidity position of the company and reported that due to summer season and Ramazan, there was a considerable increase in demand of furnace oil from IPPs but payments being made to PSO were not keeping pace with the demand for furnace oil.

The PSO managing director said that IPPs should be told to rationalise their demand and work on long-term planning for enhancing their stocks.

It was also reported that hydropower generation usually stood at 6,500MW during July every year. But inflow in dams was less than normal this season and hence generation from hydro­­power resources ranged between 4,800MW and 5,200MW. This shortfall in hydropower generation has resulted in increased demand for furnace oil by IPPs.

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Mr Dar said there appeared to be a need for revisiting the whole cycle holistically and adopting a disciplined mechanism. He directed that the consumption of furnace oil by IPPs must be realistic and corresponding to their power generation.

Although no announcement was made about future payments to the PSO, it was decided to work on rationalisation of payments for ensuring uninterrupted supply of furnace oil and to increase natural gas supply to power sector to reduce demand for furnace oil.

An official statement quoted the finance minister as saying that “steps should be taken in coordination with Irsa to ensure increased hydel power generation during the summer season”.

Mr Dar said the government had initiated work on multiple power generation projects and “in the next few years, we will not only be able to meet our energy demand but the energy mix will also be balanced in order to save foreign exchange which is being spent on import of furnace oil”. He said the focus would remain on hydel, wind, coal and solar power generation which would be less expensive as compared to thermal power.

He assured the PSO that its genuine concerns would be addressed by the finance ministry in coordination with the ministries of petroleum and natural resources and water and power.

Published in Dawn, July 8th , 2014