Oct 1 - 7, 20

During last five years circular debt has become country's biggest issue. The power, oil and gas sector are the main sufferers and in a dilemma to run their business due to acute financial crunch. The government is making some efforts to overcome the problem but they are working in a wrong direction to solve it on day to day to day basis. No serious efforts are seen to hit the root cause of this issue. The growing circular debt in country is slowly choking investment, local as well as international investor are increasingly reluctant to provide financing to new power projects. This is a notable point that country does not have sufficient indigenous fuel resources for power production, and reliance should be increased on hydel power resources.

Circular debt has created the energy crises in country; during last year power plants were utilized only 48 %, from installed capacity of 22,477 MW only 94,383 GWH of electricity was produced. This was mainly due to the unavailability of funds to operate the power plants.

In Pakistan electricity is being generated by High Speed Diesel at 25 rupees per unit, furnace oil at 17~20 rupees, gas at 5~7 rupees, and from hydel at almost zero energy cost. Then average of all types has been taken to set the electricity price. In this way government is passing all the energy cost to produce the electricity on the customers. But the problem starts here; during last year 77,009 GWH were supplied to the customer from total generation of 94,383 GWH; that shows an electricity theft of 15,315 GWH which costs around 320 Billion rupees. The continuous electricity theft is keeping the circular debt at same level despite of regular bailout packages. Presently circular debt is around 400 Billion and it is going up by rupees 15 to 20 billion in a month. The need of the time is to reduce the electricity theft and also try to reduce the production cost of electricity. In Pakistan most of the electricity produced by liquid fuel is on heavy fuel oil that is also known as HFO-180 due to its viscosity of 180 cSt. Another fuel that is being used to fire boiler around the world is HFO-380. This is also known as Intermediate Fuel Oil (IFO-380) with sulfur contents less than 3.5%. It has the same heating value as of HFO-180, so the fuel consumption will remain same. HFO-380 is US$ 25~30 per ton cheaper than the HFO-180 used in Pakistan. During last year 8,138,956 tons of oil was used in power sector. This year it is estimated to cross 10 Million tons due to lack of gas availability. There will be saving of US$ 300 Million (28 Billion rupees) in a year if HFO-180 is being replaced by HFO-380. Now we will discuss some pros and cons of this conversion project:

* There will be no major change required in the plant operation cycle

* Some modifications will be required in the storage and pre-heating system of the fuel

* As the density and viscosity of HFO-380 is higher, it will require extra heat for decanting and pumping process

* Due to high density and viscosity, it will be better to use it first at plants near sea port in Karachi

* Study is required to estimate that any special arrangement is required for its transportation

* It needs to be decided that who will bear the modification cost (Power companies or WAPDA / government)

The government should try to find some cheaper solutions to reduce electricity production cost. Hopefully this oil will save lots of foreign exchange and will play a positive role in reducing circular debt. Following is the comparative sheet of specifications for both HFO-180 & HFO-380:

1 Specific Gravity ASTM D-1298 Max. 0.96 Max. 0.99
2 Kinematic Viscosity (cSt) ASTM D-445 Max. 180 Max. 380
3 Flash Point (oC) ASTM D-93 Min. 66 Min. 66
4 Pour Point (oC) ASTM D-97 Max. 24 Max. 24
5 Sulfur Content (% wt) ASTM D-129 Max. 3.5 Max. 3.5
6 Calorific Value (Btu / lb) ASTM D-240 Min. 18,200 Min. 18,200
7 Moisture (% volume) ASTM D-95 Max. 0.5 Max. 1.0
8 Sediment (% wt) ASTM D-473 Max. 0.25 Max. 0.25
9 Ash (% wt) ASTM D-482 Max. 0.10 Max 0.10
10 Carbon Residue (%wt) ASTM D-189 Max. 12 Max. 18
11 Vanadium (ppm) ASTM D-5863 Max. 100 Max. 100
12 Sodium & Potassium (ppm) ASTM D-5185 Max. 50 Max. 50

Muhammad Rehan is an MBA & LLB, working for a law company.
Muhammad Farhan is an MBA and Chemical Engineer, working for an IPP as Performance Engineer.