In a surprise move, the federal government on Saturday removed Petroleum Secretary Dr Arshad Mahmood from his post, giving more powers to the Power Division, which is reportedly responsible for the imminent oil crisis.

The country is heading towards a crisis because of a massive slump in the off-take of furnace oil by oil marketers and power plants.

The Power Division had given a “firm commitment” of furnace oil requirements to the oil refineries and the Pakistan State Oil (PSO).

Following the commitment, the PSO had arranged two cargoes of furnace oil. However, the power sector had refused to lift the furnace oil from the PSO and the oil refineries — that will lead to a crisis.

Currently, oil refineries have warned that they would shut down over lack of storage after piling up furnace oil stocks.

The Petroleum Division had taken up the matter with the Power Division several times but to no avail. There was no response on bailing out the oil industry that had arranged a firm supply of furnace oil following its commitment.

However, the government’s wrath fell on the Petroleum Division and it removed Petroleum Secretary Mahmood, giving the additional charge to Power Division Secretary Ali Raza Bhutta.

The development has raised serious concern among the stakeholders, who say that the Petroleum Division would now entirely be on the mercy of the Power Division, which had already created problems for the oil industry.

The government has directed the former petroleum secretary to report to Establishment Division until further orders.

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Ali Raza Bhutta, presently posted as the Power Division secretary, has been assigned the additional charge of the Power Division secretary for a period of three months or until the posting of a regular one, whichever was earlier.

Dr Arshad was appointed as the Petroleum Division secretary in May 2021 and served for almost seven months.

The Oil Companies Advisory Council (OCAC) had complained to the Petroleum Division that huge volumes of furnace oil were being imported while it was not being purchased from domestic refineries.

“Local refineries, being the backbone of energy security of the country, supply over 11 million tonnes of various petroleum products, but due to non-lifting of Fuel Oil, they, owing to limited storages, are forced to reduce throughput/close the crude processing, which will affect the availability of all the other petroleum product, eventually disturbing the already fragile supply chain,” the OCAC wrote in a letter to the Petroleum Division director general (oil).

Independent power producers were not being pushed by regulatory authorities to procure furnace oil from the refineries.

According to officials, at present the country has petrol stocks of 600,000 tons as demand has remained lower than forecasts.

Earlier, the oil industry had projected consumer demand for 800,000 tons of petrol in November but the consumption stood far lower than the estimate.

After the closure of filling stations by the Pakistan Petroleum Dealers Association on November 25, then Petroleum Secretary Mahmood had played a key role in resolving the issue.