SINGAPORE - Pakistan State Oil is set to buy up to 1.14 million tonnes of oil products for delivery from September to December, about 12 per cent lower than it had initially sought, industry sources said on Thursday.

Pakistan’s oil demand has grown by a total of about 35,000 barrels per day over the past five years to around 400,000 bpd this year, with the majority of that increase for fuel oil, which is used in oil-fired power stations, according to analyst estimates.

The country is turning to fuel oil imports as it faces a gas shortage. The gas shortage is also affecting demand for gasoline as more car users are switching to petrol from compressed natural gas (CNG).

The government faces a circular debt problem where state utilities lose money from non-paying consumers and low electricity prices and cannot pay power-generating companies who in turn cannot pay gas suppliers.

Pakistan’s gasoil demand is up due to below average rains curbing hydropower generation, boosting agricultural demand for diesel to power irrigation systems. Gasoil and gasoline are both being used in back-up power generators, a source based in Pakistan said.

In its latest tender, state-owned firm PSO is set to buy 305,000 tonnes gasoil, 390,000 tonnes high sulphur fuel oil, 165,000 tonnes low sulphur fuel oil and 280,000 tonnes gasoline.

The tender closed on Aug. 29, with offers to stay valid until Sept. 7.