K-Electric secures 25,000 tonnes of furnace oil to maintain supply

Javed MirzaWeb Editor

26th Jun, 2021. 05:31 pm
K-Electric ventures into green

KARACHI: The K-Electric Limited (KEL) has secured the supply of 25,000 tonnes of furnace oil to ensure maximisation of all available generation capacity. The shipment is expected to enter Pakistani waters around July 1.

K-Electric Chief Executive Officer Moonis Alvi said: “With this prompt measure, if there is no reduction in supply of gas to KEL below already restricted levels, it will enable us to continue providing a stable supply of power to Karachi.

“The addition of this stock will replenish our fuel inventory to safe stock levels and ensure that “[the] generation is not curtailed because of [the] fuel supply shortfalls. KE is committed to effectively managing the developing situation to the best extent to minimise inconvenience to our customers.”

Analysts said depleting domestic gas availability and surge in the liquefied natural gas (LNG) prices that pushed up the cost of the gas-based power generation prompted Pakistan to turn to oil for power, a trend that could result in robust fuel oil consumption in the coming months.

Moreover, the Law Division has opposed delaying the dry-docking of Engro’s Floating Storage Regasification Unit (FSRU), which could adversely impact regasification of imported LNG for a week.

The FSRU exquisite is being operated 24 hours for the last six years and no dry-docking has been done so far, knowing the fact, it was due from 2019 and Engro Elengy Terminal Private Limited (EETPL) has been agitating the issue of dry-docking through official correspondence with the Sui Southern Gas Company (SSGC) and the Petroleum Division but no required action was taken on behalf of the Pakistan side.

The power and petroleum divisions and their attached entities are making efforts to minimise the impact of gas shortages through various fuel supply adjustments.

The furnace oil stocks at Kot Addu plant had been beefed up and arrangements were being made to stock up Hubco’s storage so that at least the K-Electric’s partial requirement could be met through Hub Power Plant that normally remained almost closed for being low on merit order because of its furnace oil-based turbines.

“While we do not believe Pakistan will fully utilise the existing oil capacity, we assume some switching will take place over the next couple of months. Pakistan has problems sourcing spot LNG cargoes; hence, higher usage of oil units could be expected on the back of lower gas availability,” said Andre Lambine, senior power analyst at S&P Global Platts.

The grid-connected oil-fired power plant capacity in Pakistan is around 8GW. The country’s fuel oil consumption could rise by as much as 20 per cent by the end of the current fiscal year, as the gas supply situation will tighten further, while the industrial sector’s demand for power is rising amid a rush to meet international orders.

The fuel oil sales in Pakistan had already hit a three-year high of 240,000 tonnes in December 2020 on the growing demand from the power sector, while the furnace oil sales in the current financial year are expected to post an increase after three consecutive years of declines on the back of a gas supply crisis and high LNG prices.

The K-Electric has persistently been under criticism for not utilising its optimum generation capacity to reduce costs, which resulted in hours long power outages.

Last month, leaders of the Muttahida Qaumi Movement-Pakistan (MQM-P) and Jamaat-e-Islami (JI) criticised the power utility for its failure to overcome the load-shedding, despite the passage of more than one-and-a-half decades after its privatisation.

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