Oil sales in the country have dwindled by four percent in the first 10 months of the FY11 primarily because of, what the analysts believe, lower consumption of High Speed Diesel (HSD) and Furnace Oil (FO). The two fuel products together contribute 85 percent of the overall oil consumption in Pakistan. “This is primarily because of the devastating floods that have reduced trade activity, culminating into an eight percent decline in diesel sales while temporary closure of a few big IPPs has reduced the FO consumption by three percent,” said Nauman Khan, an analyst at Topline Research. The analyst revealed that an 11 percent monthly decline was seen in April compared to March.
This, Khan said, was propelled by a monthly 12 percent decline in FO sales.
“The liquidity crunch has led to a supply constraint as the sector opted out to avoid imports,” the analyst said, adding that the country’s reliance on imported fuel has subsequently declined by a massive 16pps to only 59 percent last month as compared to 75 percent in March. He claimed that lesser availability of the FO due to subdued imports by the sector rendered into a decline in the product’s sales in April in contrast with the pervious month. FO sales shed by 12 percent and stood at 733,000 tonnes. Petrol sales declined by monthly one percent, but underwent a massive annual up tick of 16 percent to stand at 196,000 tonnes in the said month.
Sales of HSD, primarily used in transportation activities, saw a decline of three percent to stand at 569,000 tonnes. Khan said that last year’s devastating floods have continued to reflect on the sale of fuel products during the month under review. “Impact of floods continued to weigh on the consumption number in the 10MFY11,” he said. Volumetric sales declined by four percent in the said period to stand at 16 million tonnes compared to 16.7 million tonnes in the same period last year. FO and HSD sales squeezed by three and nine percent, respectively, while petrol sales surged by 18 percent on account of the prevalent gas curtailment which reduced CNG consumption.
A company-wise data shows that Pakistan State Oil was the only oil manufacturing firm that was adversely affected by the floods. Meanwhile, Shell Pakistan and Attock Petroleum improved their performance. Sales of PSO sales reduced by 12 percent, while that of Shell and APL surged by 15 percent each. The analyst asserted that oil sales would improve in the coming months. “With partial clearance of circular debt, the liquidity pressure, particularly for PSO, has eased,” Khan said.
