to State Bank’s quarterly report, unfortunately, due to circular debt
local refineries could not provide required FO quantity to power
generation companies. As a result, import burden has increased
significantly for FO provision”.The growth seen in Jul-Dec FY10
period will be challenging to sustain in the remaining months of FY10
given the inadequate energy balances in the country. For instance, the
increase of 0.5 percent in gas exploration during Jul-Nov FY10 period
does not seem sufficient to fuel a quick recovery. It must be noticed
here that gas constitutes more than 50 percent of total energy
consumption by industries. Similarly, scanty power investments in
recent years allowed only a small increase in electricity generation
capacity; which too often remains under-utilized due to water shortages
or insufficient provision of gas and/or furnace oil ..For instance, as winter rains remained low in FY10, the Hydel generation capability declined sharply in January 2010 ..Similarly,
gas sales to power sector also declined during H1-FY10. Consequently,
the use of furnace oil (FO) for thermal generation increased .