Diesel shortages could hamper crop harvest

KARACHI: Sharp decline in the country’s diesel stock over the weeks could lead to a shortage during the fast approaching harvesting season in the month of March 2023, The News has learnt.

Pakistan State Oil (PSO) did not import diesel in the current fortnight and only one cargo of 60,000 tonnes of high speed diesel (HSD) has been planned for import in the next fortnight. Meanwhile, the demand of diesel is expected to shoot up in the month of March when harvesting season starts in the southern parts of the country, sources revealed.

Diesel demand in the country averages around 20,000 tonnes per day in the country and goes up to 35,000 tonnes in the harvesting season. “The higher demand of diesel is met through more import and its production in the local refineries,” sources pointed out.

However, this year the situation is entirely different. Local refineries have been struggling with the establishment/opening of letters of credit to import crude oil for the production of diesel. As a result, most of the refineries are running below their full capacity due to short supply of crude oil, sources added.

On the other hand, import of diesel is also not on the higher side as only one cargo of 60,000 tonnes of PSO would arrive in the country in the next fortnight, starting from March 1, 2023.

Sources pointed out that the demand of diesel in the harvesting season goes up to 35,000 tonnes per day. Refineries running at full capacity produce 14,000 tonnes per day, and the rest of the demand is met through imports. However, the scheduled import of diesel in the next fortnight would only be sufficient to meet the demand for three days in the harvesting season. If it was not the harvesting season, the imported volume would have sufficed seven to eight days.

Sources said that local refineries were unable to settle their credit letters, which was why their production was low, whereas diesel import also need dollars, which were in short supply in the country due to fast dwindling foreign exchange reserves and very low inflows from external sources.

They pointed out that low production of diesel in the refineries and lower imports were reflected by the total stockpile of the fuel in the last several weeks.

According to sources, the country had diesel stock of almost 600,000 tonnes at the start of January, which fell to 360,000 tonnes by the third week of February. This reflects that demand is fast eating up the diesel stock and the situation would aggravate further when the harvesting season begins in March, triggering the demand manifolds.