ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Tuesday accorded approval to the state-owned Pakistan State Oil for importing furnace oil for the power sector.

The ECC meeting, headed by Prime Minister Shahid Khaqan Abbasi, took the decision for maintaining adequate fuel stock for the sector in the coming months.

Ahead of the next election, the government is working hard to bring power loadshedding to a minimum level due to minimal hydropower availability.

PSO was directed to help create the required furnace oil stock, especially for power plants in Punjab.

On October 27, 2017, the cabinet committee on energy placed a ban on furnace oil imports. The ban was imposed to encourage the LNG-based generation in the country.

In order to ensure stable and reliable power supply through the National Grid System and to enhance NTDC’s system capacity, the ECC also accorded approval for issuance of government of Pakistan’s Sovereign Guarantee against financing facility of Rs9.84bn from local banks for NTDC projects.

The electricity load-shedding has re-surfaced ahead of the arrival of summer, especially in Karachi. Currently, 9500MW worth of furnace oil-based plants operate in the country.

The furnace oil imported will be provided to these plants to keep generation at the required level.

But the ECC directive came at a time when the PSO was struggling to recover around Rs335bn in receivables, mostly from the public sector entities and has been running from pillar to post for Rs100bn disbursement by the government.

The PSO receivables have increased from Rs302bn since Oct 14, 2017.

No decision was announced regarding the quantity of import of furnace oil or the schedule of the imports. Moreover, the mode of finance for import of furnace oil and its subsequent supply to power plants was also not clarified.

The ECC meeting also accorded approval to transportation tariff for Machike – Taru Jabba Oil Pipeline (427km) project. The tariff will be ratified by the Oil and Gas Regulatory Authority after due process.

Published in Dawn, April 18th, 2018