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High fuel prices hit industrial consumers

By Muhammad Yasir

KARACHI: The industrial consumers of the country are witnessing a significant increase in their cost of production due to skyrocketing prices of furnace oil in the global markets.

According to the international prices, around $120 per metric tonne or 30 percent prices of furnace oil increased during the last six months. Currently the prices are hovering at $400 per metric tonne. Analysts mentioned that the prices of fuel oil started were recorded at $288 per metric tonne since February and it gradually increased by $20 per metric tonne. The furnace oil is largely used in the production of electricity in Pakistan and its consumption has increased about 50 percent to 138, 371 metric tonnes during June to May 2006-07 as recorded by Oil Companies Advisory Committee (OCAC). Apart from power generating industries, it is also used in industrial units particularly in boilers that increased their cost of production.

Scores of local industries have converted their boilers mechanism and obtained gas connection to run it. But, there are many industries that are still utilising furnace oil to run their machinery and facing the burden of high cost of production due to high prices in the international market. The industrialists purchase furnace oil at Rs 27,748 per metric tonne, which soared from Rs 20,148 per metric tonne, showing Rs 7,593 PMT surge since February. The gas provision is stopped by gas providing companies during four months of winters so industries have to run their boilers from furnace oil.

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