ISLAMABAD  -   The government on Wednesday banned the import of furnace oil which will increase offtakes of the fuel from the local refineries.

The decision was taken in the meeting of Cabinet Committee on Energy (CCoE) which met with Federal Minister for Energy (Petroleum Division) Ghulam Sarwar Khan in the chair.

The Cabinet Committee on Energy (CCoE) also decided that the prices of Liquefied Petroleum Gas (LPG) will not be increased. The committee noted that LPG is fuel of the poor and asked the authorities that common consumers should be given relief. The meeting was attended by Sheikh Rashid Ahmad, Federal Minister for Railways, Asad Umar, Federal Minister for Finance, Umar Ayub Khan, Federal Minister for Power, Khusroo Bakhtyra, Federal Minister for Planning and Abdul Razzaq Daud, Adviser to Prime Minister for Commerce and Industries.

The CCOE also decided that the import of furnace oil will be banned and for short-term oil refineries will work with their full capacity. It was decided that the power sector can help refineries making storage arrangements for next three months on credit. The committee observed that these are temporary measures and the oil refineries need to upgrade themselves.

The Cabinet Committee on Energy also formed a task force under Babar Nadeem, which will make recommendations on issues of oil refineries and will present these recommendations in the upcoming meeting of CCoE. The Committee asked the refineries that during this period find the export avenues for the furnace oil, as this decision would be for a short-term of around three months.

Owing to decrease offtake of furnace oil from the local refineries all the major refineries have slowed down and were operating on their lowest level of 65 percent. In November the Oil Companies Advisory Council (OCAC) in a letter to the ministry of energy said that they have hundreds of thousands tones of furnace oil stocks and they were running out storage space.  Due to low demand of electricity in winter season and import of furnace oil, the offtakes from the refineries was decreased and they were compelled to store the surplus furnace oil in their storages. The refineries were running out of space for the other petroleum products such as HSD, Petroleum, Jet fuel etc and have warned of shutdown if the trend of low offtakes continues. To resolve the issue of surplus furnace oil, the OCAC has proposed the government that at least 300,000 metric tons Furnace oil per month should be made mandatory part of energy mix for the power generation.

The committee also decided that merit order would be strictly followed. It would not be disturbed, so that consumer can be provided electricity at affordable prices.

A Standard Operating Procedure (SOP) would also be devised on criteria of demand of power division and gas supply from Sui Northern Gas Pipelines Limited (SNGPL). It would be discussed in the CCoE’s next meetings and after the finalisation, it would be ratified through Federal Cabinet.