Friday June 26, 2009
ISLAMABAD: Pakistan Refinery Limited (PRL) and National Refinery Limited (NRL) have curtailed jet fuel supply to Shell Oil Marketing Company that may result in disturbance of flights at Karachi airport due to fuel shortage. Sources revealed to Business Recorder on Thursday that Shell had written a letter to the Petroleum Ministry, saying that the PRL and NRL were not supplying enough JP-1 fuel to maintain critical stocks necessary to sustain the air traffic.
The sources said Shell warned that its jet fuel stocks had dropped due to curtailed jet fuel supply by the PRL and NRL, and asked Petroleum Ministry to make alternative arrangements for jet fuel supply for airlines as fuel shortage might disturb flight schedule at Karachi airport. Responding to a letter addressed by Shell, the sources said, the Petroleum Ministry had written letters to the Managing Directors of the PRL and NRL, asking them to enhance the fuel supply to Shell in an effort to maintain fuel stocks for airlines.
The Sources were of the view that the PRL and NRL had reduced jet fuel supply to Shell due to lower production as a result of the financial crunch. Owing to circular debt problems, oil marketing companies (OMCs) and oil refineries are facing problems in continuing to supply fuel in the country. Power sector is a big defaulter and the main reason behind rising circular debt. The state run Pakistan State Oil (PSO) is a major fuel supplier that captures 70 percent of the market share and its dues against different clients have exceeded Rs 84 billion.
The PSO is facing a severe liquidity problem and is unable to open the letter of credits (LCs) for import of oil to meet the country's requirements. The Finance Ministry has recently issued Rs 24 billion paper guarantees to Pakistan Electric Power Company (Pepco) to settle the circular debt in oil and power sectors. However, analysts have termed the exercise of issuing paper guarantees as paper work that would provide no relief to the cash starved PSO and oil refineries.
Under the arrangement, the Pepco will divide Rs 24 billion paper guarantees into three parts, making book transfers to the electricity producers, including Hubco and Kapco. The Pepco would transfer some of the amount to the KESC and the PSO. In return, the Hubco, Kapco and the KESC would then reduce some of the debts on the books of the PSO and the KESC. Analysts point out that during the exercise, there would be no cash flow and ultimate beneficiary would be the government as it would receive dividends from the PPL and OGDCL at the end of the exercise.
(BRecorder)
ISLAMABAD: Pakistan Refinery Limited (PRL) and National Refinery Limited (NRL) have curtailed jet fuel supply to Shell Oil Marketing Company that may result in disturbance of flights at Karachi airport due to fuel shortage. Sources revealed to Business Recorder on Thursday that Shell had written a letter to the Petroleum Ministry, saying that the PRL and NRL were not supplying enough JP-1 fuel to maintain critical stocks necessary to sustain the air traffic.The sources said Shell warned that its jet fuel stocks had dropped due to curtailed jet fuel supply by the PRL and NRL, and asked Petroleum Ministry to make alternative arrangements for jet fuel supply for airlines as fuel shortage might disturb flight schedule at Karachi airport. Responding to a letter addressed by Shell, the sources said, the Petroleum Ministry had written letters to the Managing Directors of the PRL and NRL, asking them to enhance the fuel supply to Shell in an effort to maintain fuel stocks for airlines.
The Sources were of the view that the PRL and NRL had reduced jet fuel supply to Shell due to lower production as a result of the financial crunch. Owing to circular debt problems, oil marketing companies (OMCs) and oil refineries are facing problems in continuing to supply fuel in the country. Power sector is a big defaulter and the main reason behind rising circular debt. The state run Pakistan State Oil (PSO) is a major fuel supplier that captures 70 percent of the market share and its dues against different clients have exceeded Rs 84 billion.
The PSO is facing a severe liquidity problem and is unable to open the letter of credits (LCs) for import of oil to meet the country's requirements. The Finance Ministry has recently issued Rs 24 billion paper guarantees to Pakistan Electric Power Company (Pepco) to settle the circular debt in oil and power sectors. However, analysts have termed the exercise of issuing paper guarantees as paper work that would provide no relief to the cash starved PSO and oil refineries.
Under the arrangement, the Pepco will divide Rs 24 billion paper guarantees into three parts, making book transfers to the electricity producers, including Hubco and Kapco. The Pepco would transfer some of the amount to the KESC and the PSO. In return, the Hubco, Kapco and the KESC would then reduce some of the debts on the books of the PSO and the KESC. Analysts point out that during the exercise, there would be no cash flow and ultimate beneficiary would be the government as it would receive dividends from the PPL and OGDCL at the end of the exercise.
(BRecorder)
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