Furnace Oil prices have been increasing at an alarming rate, only during the previous month the prices have risen by 26.26%. The rise in prices is expected to have a negative impact on the economy as petroleum prices have also risen in the international markets.
During the month, Furnace Oil prices have gone up from Rs. 52,023 per metric ton to Rs. 65,689 per metric ton.
The hike in the prices of commodities is usually transferred on to the end consumers in Pakistan. Hence, it would be safe to assume that given the recent change in the price of Furnace Oil the impact would translate into increasing electricity prices as a result of fuel adjustment charges.
The move would benefit the local Refineries which recorded their protest with the PM after he single handedly stopped the operations of Power Plants running on Furnace Oil. PSO and other refineries with stored Furnace Oil would benefit greatly from the price hike, accompanied by the Government’s move to reduce the Furnace imports to zero.
Only as recently as December 10th, oil refineries had their storages filled to brim as a result of excessive imports of Furnace Oil and liquefied natural gas (LNG) to run power plants. Most of the refineries including state owned PSO had virtually closed down due to the glut.
In a very personal yet controversial attempt by the Prime Minister last month, he announced that the country would stop importing Furnace Oil during 2018. The Prime Minister mentioned climate change, and the burden on reserves as the main reasons behind the move.
Taking his stand on the climate change, Prime Minister also warned that the country will phase out furnace-oil based power generation in the near future to mitigate oil’s negative fallout on climate.
Government has already stop commissioning new power plants on furnace oil in the wake of a growing import of relatively inexpensive LNG.