KARACHI: Oil sales fell for the fifth consecutive month in April led by falling demand of high selling diesel.
High speed diesel sales dropped 15% on account of prices moving in triple digits followed by fall of 8% in sales of furnace oil – the highest consumed fuel – on a yearly basis due to rising circular debt levels and lower demand from Independent Power Producers (IPPs), according to a BMA Capital research note issued on Wednesday.
Last night, failure to honour its financial commitments to Independent Power Producers (IPP) led to the first-ever sovereign default by the government in Pakistan’s history. The government defaulted on payments of roughly Rs45 billion to nine IPPs that generate 1,700 megawatts of electricity. This move has brought production level of power generation down and with it the demand of furnace oil.
Jet fuel (JP) sales also declined 45% on a yearly basis as Nato supplies remained shut since December.
Petrol was the only fuel to buck the trend and rise a healthy 3% in April on a yearly basis on account of increased CNG outages in the country.
Consumption level plummeted by 10% in April against the preceding month, showing a falling demand in the current year so far.
With these numbers, the overall consumption in the ten months of the current financial year has clocked in on a negative note as sales declined 3% to 15.6 million tons compared with 16.1 million tons in the same period last year.
“There are chances that populist measures by the government in the next few months to curtail power outages through partial payments to independent power producers may ignite fresh interest in the sector,” says the note.
Published in The Express Tribune, May 10th, 2012.