PSO to ink fuel supply deals with OMCs

ISLAMABAD - In a bid to share loss in case of destabilization of rupee currency against dollar, Pakistan State Oil (PSO) is set to enter fuel supply agreements with Oil Marketing Companies (OMCs), it was learnt on Wednesday. To amicably deal with dramatic fluctuating trends in global oil prices and countrys soaring fuel demands that recently caused outages of electricity and also remain a major reason of low production from industrial sector, the incumbent government is trying hard to secure and sustain fuel supply in the country. PSO wants to enter fuel supply agreements with OMCs on the same terms and conditions agreed with Kuwaits state-owned entity Kuwait Petroleum Corporation (KPC) in a bid to share loss in case of destabilization of rupee currency against dollar, sources said, adding that Minister for Petroleum Dr Asim Hussain had discussed the proposal during a recent meeting held in Ministry of Petroleum to provide oil imported from Kuwait to other Oil Marketing Companies (OMCs) by Pakistan State Oil (PSO) that receives fuel supplies from KPC. It is pertinent to mention that Pakistan has been spending around $ 2 billion on import of 3 million tons diesel and 1 million tons furnace oil per annum from Kuwait to meet domestic requirements. Kuwait is currently supplying oil to Pakistan on two-month deferred payment facility since 2008. Pakistan has also offered Kuwait to set up oil refinery in Pakistan by KPC to ensure secured supply of fuel during recent visit of President Asif Ali Zardari. Kuwait Petroleum Corporation (KPC) is the oldest fuel supplier to Pakistan. As Pakistan is set to import 5 million tons diesel, 7 million tons crude oil, 7 million tons furnace oil, 1 million tons petrol and 1 million tons jet fuel in next financial year 2011-12 to meet domestic requirements so Petroleum Ministry has asked PSO to materialize an agreement with OMCs over smooth supplies of fuel in the country sources said, adding, However, PSO viewing the market trends and continued depreciation of value of Pakistani rupees was forcing it to secure an agreement with same terms and conditions to other OMCs supplying fuel in the country as is likely to agree with KPC soon. It is worth mentioning here that all refineries of the country were operating almost at 70 percent refining capacity due to circular debt issue though the government has recently injected Rs 120 billion to clear circular debt that has also again started piling up due to non-payment of dues by power sector to Pakistan State Oil (PSO).

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