KARACHI: Pakistan exported over 0.5 million metric tonnes (MTs) of furnace oil (FO) in the first four months of the current financial year after its local demand slumped massively.
The high export of FO was mainly driven by the imposition of the petroleum levy (PL) and carbon support levy (CSL) on its local sale in the current budget, as well as its low consumption in power plants for electricity generation.
Data from the oil industry showed that the country exported 452,787 MTs of high sulphur furnace oil (HSFO) and 54,302 MTs of low sulphur During July, the country exported 69,625MTs of FO, and exports surged massively in August when 208,000MTs were exported. FO exports dropped to 27,355MTs in September; however, they again rose to 200,000MTs in October.
Industry people attributed the high export of FO to the imposition of the petroleum levy in the current fiscal budget, which dampened demand in the local market as the fuel became expensive after the inclusion of the levy. The government imposed Rs82,077 PL and Rs2,665 CSL on every tonne of furnace oil sold in the domestic market.
Industry people said that fuel oil has become expensive after the levy and its local sale has plunged massively. The figures showed that the sale of FO fell by 27 percent to 0.07 MTs in the first four months of the current fiscal year compared to 0.27 MTs in the corresponding months of the last fiscal.
They said the local power sector was already consuming little FO for electricity generation, as it is low on the merit order because of its high cost and the levy of PL and CSL.
Power generation data showed that the country produced only 48 MW of electricity from furnace oil during October, out of a total 9,886MW produced collectively during the month. Power generation from FO was also down by 51 per cent compared to 97MW produced in September this fiscal year.
Sector people said that FO sales will be further reduced in the coming months and that refineries are now exporting it despite not receiving good prices in the international market. They said the refinery sector is also facing hardships due to delays in the passage of the brownfield refinery policy, which would otherwise help reduce FO production once refineries are upgraded.
