PSO defers import of 2 diesel cargoes from Kuwait Petroleum
Pakistan State Oil (PSO) has deferred the import of two cargoes of diesel from Kuwait Petroleum Corporation (KPC) after its sale from legal channel dropped massively, The News learnt on Monday.
The state-owned oil marketing company (PSO) deferred the import of these cargoes due to low consumption of diesel from the legal channels after smuggled Iranian oil grabbed the local market due to its cheaper rates.
PSO has an arrangement with KPC for the import of diesel and had placed the order for two cargoes of diesel each having 50,000 MT. PSO requested KPC to put on hold the delivery of these cargoes, which were scheduled to arrive in Pakistan by the end of this month, sources revealed.
Sources that demand of diesel in the country is being met through smuggled diesel from Iran as the high price of Pakistani diesel is making it uncompetitive against the Iranian fuel. The price of high speed diesel in Pakistan is Rs293 whereas the price of smuggled Iranian diesel varies from border areas of Balochistan with Iran to other parts of the province as well as to Karachi and other parts of Sindh and even in Punjab. However the maximum price of Iranian diesel comes around Rs230 to Rs235 per litre, which is quite economical compared to Pakistani diesel.
Sources said that most of the heavy traffic has switched over to Iranian diesel, while public transport is also using the smuggled commodity. According to oil industry players, the total stocks of diesel in the country have risen 680,000 MT, which are sufficient to meet the demand of diesel for 44 days. These stocks have piled up due to low sales of diesel from the legal channels.
The total sale of diesel from the formal sector is around 15,500 MT monthly, which is less than the actual demand, as the current demand is higher than 25000 MT. Oil industry raised the issue of Iranian smuggled diesel with the government recently when it met with the Petroleum Minister in Karachi as refineries have particularly been feeling the heat of Iranian diesel, which is being pumped in huge quantities. The government has been turning a blind eye to the situation to save the scarce foreign exchange. Petroleum group is the biggest foreign exchange consuming sector as it imports huge quantities of crude and petroleum products.
This stockpiling of diesel at refineries has badly affected the operations of the local refineries, with Pak Arab Refinery Limited (PARCO) having to shut down its operations last week. PARCO has shut down its operations for some days as its storage capacity has shrunk due to non-lifting of diesel it produces