Aaj News

Power outages may continue during Ramazan due to furnace oil shortage

Sources say key reason for the shortage of furnace oil is ‘non-availability of funds to IPPs’
Updated 30 Mar, 2022 02:04pm
The sources said electricity demand was on the rise due to hot weather but at the same time 800-900 MW free electricity from K-3, has been suspended due to a fault in the plant which triggered shortfall of 1000 MW, which has now been reduced to 400 MW. AFP/File
The sources said electricity demand was on the rise due to hot weather but at the same time 800-900 MW free electricity from K-3, has been suspended due to a fault in the plant which triggered shortfall of 1000 MW, which has now been reduced to 400 MW. AFP/File

The country may face load shedding in Ramazan (likely to commence from April 3, 2022) due to shortage of furnace oil and RLNG, well informed sources told Business Recorder. “RLNG-fired plants, which are most efficient plants, are being supplied 460 MMCFD RLNG against demand of over 700 MMFCD while furnace oil position is also unsatisfactory,” the sources added. M/s Gunvor has already backed out of four LNG cargoes due to in April, May and June 2022.

The sources said that the key reason for the shortage of furnace oil is non-availability of funds to the IPPs, adding that contractually power plants are bound to ensure stocks of fuel for two weeks but when government does not clear their due payments as per their contracts, they use it as excuse for not buying the required quantity of fuel.

The government has already started unscheduled load of electricity in the country due to less supply of fuel to the power plants. The sources said electricity demand was on the rise due to hot weather but at the same time 800-900 MW free electricity from K-3, has been suspended due to a fault in the plant which triggered shortfall of 1000 MW, which has now been reduced to 400 MW.

“If current fuel supply situation continues in the days to come, it would be very difficult to ensure uninterrupted supply of electricity in Ramazan,” said an official on condition of anonymity. According to Secretary Energy, KP, there is a law and order situation in Lower Chitral and Upper Chitral due to 12 to 22 hours long load shedding. People in Peshawar are also on the streets against prolonged unscheduled load shedding.

However, Minister for Energy Hammad Azhar argues that there is no unscheduled load shedding in the country. “No unscheduled load shedding. Demand and supply is balance. Revenue-based load shedding only,” he said while replying to a question sent by this correspondent.

On Tuesday afternoon, generation was 16790 MW which was equal to demand, except revenue-based load shedding. According to sources, recently, Central Power Purchasing Agency-Guaranteed (CPPA-G) wrote to the government that it was facing serious financial crunch due to low recovery from power Distribution Companies (Discos). CPPA-G requested the ECC to approve Rs 150 billion to clear overdue payments of coal-fired power plants, mostly owned by the Chinese companies, but the forum approved only Rs50 billion as Tariff Differential Subsidy (TDS) after Finance Ministry refused to support the proposal, citing financial woes.

CFO, CPPA-G has stated that due to poor cash inflows/ remittances from DISCOS to CPPA-G, the overdue payables to CPEC projects amounted to Rs256.8 billion as on March 29, 2022. In this regard, ECC has already approved release of Rs100 billion in two tranches for payments to CPEC projects out of which Rs50 billion had already been paid to the CPEC projects. The current raise in the fuel prices has further added burden on the cash flow.

He has requested Power Division that release of the second tranche be arranged as supplementary grant through MoF on urgent basis for onward payment to CPEC projects.

Pakistan State Oil (PSO) has also made it clear that it cannot ensure supply of furnace oil to non-contractual consumers (IPPs). According to PSO, it has supplied 27,224 MTs fuel oil and will supply approx. 17,500 MTs to its contractual customers including Lalpir, Pakgen and KEL and 9,000 MTs to non-contractual customers including Saba Power, Liberty Tech and Nishat Chunian in remaining days of March, 2022.

In addition to this volume, 44,000 MTs has been supplied to K-Electric and approx. 45,000MTs will be supplied to K-Electric in remaining days of the current month. However, PSO has stated that it will be responsible for the supply/ dispatch of fuel oil to its contractual customers. The supplies to non-contractual customers will be made on best endeavour basis and subject to availability of fuel oil.

PSO’s receivables have also reached the whopping level of Rs 650 billion as IPPs and Gencos are not clearing their due payables. Meanwhile, 200MW Nishat Power Limited, located 66 KM off Lahore Multan Road, Jamber Kalan Tehsil Pattoki District Kasur (LESCO grid area) is badly suffering from the ongoing RFO shortage in the country. The company has requested Power Division to issue a No Objection Certificate (NOC) to the Company to import around 5,000 Metric Ton RFO from OMC of their own choice.

Nishat Power has cited reference of a CCoE decision taken on June 18, 2020 in which it decided that private IPPs may be allowed to import RFO through PSO or other OMCs after getting a NOC from the Power Division, ‘which shall consult with Petroleum Division to ensure all local RFO is consumed first keeping in view the demand and supply situation.’

General Manager, Engineering, KAPCO, in a letter to CPPA-G stated that PSO has intimated the tentative price of LSFO cargo will be around Rs 205,080/ MT inclusive of GST. This implies that price of generation from KAPCO’s Energy Block-1 will be Rs34 per unit on LSFO and Rs 30.7 per unit on HSD whereas the generation cost of Energy Block—2 will be Rs 37.7 per unit on HSFO and Rs 33.8 per unit on HSD in March.

In April 2022, generation forecast from KAPCO will be 468 GWh, which requires 98,000 MTs of HSFO whereas in May, 2022 generation forecast is 482 GWh, which needs 100,000 HSFO as no RLNG has been allocated to the plant.

However, KE, in its letter states that summer period has already started in Karachi and accordingly the power demand has increased, significantly. However, the gas supply to KE is still restricted at 95 MMCFD as compared to 152 MMCFD supplied to KE in the month of March and 257 MMCFD in the month of April last year.

The power utility was of the view that as Ramazan is fast approaching it would be crucial for KE to operate SGTPS, KGTPS and Korangi CCPP plants to provide uninterrupted power supply to the people of Karachi. KE has urged SSGC to increase the gas quota immediately to at least 190 MMCFD in line with the CCoE decision and maintain gas pressure at SGTPS (2.5 bar), KGTPS (2.5 bar) and KCCPP (4 bar) to fulfil the operational requirements of these plants.

The story was originally published in Business Recorder on March 30, 2022.

CPEC

رمضان

load shedding

IPPs

Comments are closed on this story.