Jet fuel consumption rises due to flood relief activities

[Lahore_Real_Estate]

* Sale of high-speed diesel, fuel oil falls

ISLAMABAD: Pakistan’s consumption of jet fuel has increased sharply over the last month as the government has increased relief activities across the country following the recent severe floods, boosting demand for the product, an official said.

However, he added that sales of high-speed diesel and fuel oil have fallen in the country because of damage to roads and infrastructure, reducing transportation.

Pakistan State Oil (PSO) is now facing difficulties supplying jet fuel for the relief operation being conducted by the country’s army and non-governmental organisations, as well as for helicopters and planes sent over by other countries to help the people affected by the floods, said the official at the company who wished not to be named.

Heavy monsoon rains since July have caused floods to sweep south along the course of the 3,200 km Indus River, devastating low-lying areas of Punjab and Sindh provinces, the densely populated economic and agricultural heartland of Pakistan, damaging some 722,000 homes.

“Huge outstanding amounts owed by state-run companies and power companies against the sale of oil is hurting PSO, as the total amount reached Rs 140 billion” the official said.

In addition to this, PSO has to pay around Rs 115 billion to refineries for the purchase of products including high-speed diesel and fuel oil. The source added that PSO needs funds from the government to keep the supply of products—especially jet fuel—steady.

“We have asked the government to halt exports of jet fuel to Afghanistan made by the Attock Refinery, amounting to 4,000 MT/month,” the official said.

Last week, PSO, the country’s biggest retail oil supplier, estimated the company’s initial costs from flood damage to be Rs 2.9 billion, with several of its outlets across the country affected. This could rise once damaged sites are accessible and a final assessment can be made, the company official said.

PSO’s Lalpir Oil Depot in Punjab, the largest fuel oil storage site in that region, experienced most of the damage. The depot supplies 50,000 MT of fuel oil per month from the Parco refinery to power companies AES Lalpir and Kot Addu Power through a pipeline. Lalpir was under more than six feet of water last week, so the storage site has been inaccessible. It is estimated that it will take at least four to six weeks for the depot to be operational, as the water will need to recede completely. PSO needs an emergency cash injection of Rs 25 billion to meet the 100 percent increase in Jet Fuel (JP-1) demand for the aircrafts engaged in relief operations, PSO Managing Director Irfan Qureshi said. He said the demand of JP-1 has spiked due to increasing air traffic by armed forces and Pakistan International Airlines (PIA) to rescue millions of people hit by the floods in different parts of the country. The aircraft operations must be ensured uninterruptedly at the airports of metropolis including Peshawar and Chaklala.

PSO needs 4,000 metric tonnes extra fuel to meet the requirement of national aircraft though it has stopped supplying fuel to international carriers at all airports, he added.

The local refineries JP-1 production capacity has decreased following their destruction by floods though their full supplies of the specific product are not enough to meet its rising demand.

The JP-1 supplies from PARCO, Bosicor and Pakistan Refinery Limited are gradually restoring to the company. PSO’s outstanding receivables have increased to Rs 128 billion and its payable dues rose to Rs 87.7 billion as a result of circular tax. PSO MD said it needs cash from its commercial customers- Independent Power Producers - in order to carry out imports of the most demanding oil product of the time. “Any gap in the supply chain means prolonged shortage for the next three to four months because the company needs to float tenders to purchase the product.”