Oil products import increases by 26pc

KARACHI - Oil products import has increased by 26 per cent in 11MFY10, as total imports stood at 11.2 million tons. The experts said in a report that due to circular debt crisis, the local refineries are producing less than their capacity and resultantly during 11MFY10, total oil products imports stood at 11.2 million tons as compared to 8.9 million tons during same period last year, up 26%. This is primarily led by furnace oil (FO) imports which stood higher by 30% Year on Year basis to 6mn tons. On the other hand, import of crude oil declined by 15% in the same period causing total imports to increase by 8% to reach 17.3mn tons in 11MFY10. However the import of FO, major fuel for electricity generation in Pakistan, stood at record 0.75mn tons in the month of May 2010. Due to rising FO demand in the country by thermal power plants and restrictive local refinery capacity, imports of FO is consistently increasing. During 11MFY10, total imports of FO stood at 6mn tons versus 4.6mn tons last year. During this period, FO demand in the country stood at 8.4mn tons. That said, this year, 71% of the FO demand is met through imports versus 63% last year. Similarly, import of petrol in the month of May stood at record 0.1mn tons compared to average monthly imports of 0.05mn tons in FY11. This is mainly due to higher petrol demand amid CNG shortage. Circular debt is the major reason behind declining refinery production. Due to liquidity shortage, refineries demand for crude oil is reduced. This is evident from OCAC website that refineries during 11MFY10 imported only 6mn tons versus 7.1mn tons, 15% lower intake than last year. Whereas only in the month of May 2010, crude oil imports stood at 0.5mn tons, lowest monthly imports in last 18 months. Due to lower indigenous oil production Pakistan refineries meet 73% of the crude requirement through imports. Two big oil refinery plants are expected to commission in next 6-18 months with combined processing capacity of 220,000 barrels per day, more than 80% of the countrys existing refinery capacity. These are BYCOs 120,000 barrels per day and TransAsias 100,000 barrels per day processing plants, experts said.