KARACHI: Petrol sales surged to a 10-month high in February ahead of the likely increase in its price, while the drop in sales of diesel was contained at just 1% due to the revival in demand that came from forces, amid recent escalation in tensions on the Pakistan-India border.
Petrol sales surged to 614,000 tons in February compared to 527,000 tons in the same month last year, according to data compiled by Topline Securities. “Mogas sales posted 10-month high growth of 16% year-on-year in expectation of rise in petrol prices,” the brokerage house analyst Shankar Talreja said in a commentary on Monday.
To recall, Brent crude oil prices had maintained an uptrend in the international markets in the second half of February due to reduction in production by oil producing and exporting countries. It surged around $10 per barrel to $65.
Keeping in view the trend, the Oil and Gas Regulatory Authority (Ogra) had recommended an increase of Rs4.71 per litre in petrol price for March 2019. The government, however, approved an increase of only Rs2.5 per litre to Rs92.88 with effect from March 1, 2019.
Besides, continuous growth in the demand for petrol convinced oil marketing companies to take calculated risk of storing higher quantities in contrast to a drop in sales of other petroleum products in recent months.
Moreover, a substantial increase in CNG (compressed natural gas) price in the recent past and limited availability of gas fuel due to the gas crisis also encouraged oil marketing companies to accumulate higher quantities of petroleum even in the days the country is witnessing an economic slowdown.
The analyst added, “diesel (sales) decline was restricted to 1% year-on-year (in February) versus average decline of 22% year-on-year in first seven months of FY19, amidst its sales to security forces due to the recent armed conflict between India and Pakistan.”
Diesel sales were recorded at 584,000 tons in February 2019 compared to 591,000 tons in February 2018, it reported.
Overall sales of the oil marketing companies, however, decreased 2% to 1.42 million tons in February compared to 1.45 million tons in the same month last year, owing to a notable “31% decline in furnace oil sales due to its lower consumption in power generation”, he said. Excluding further oil, the overall sales increased 4% to 1.25 million tons compared to 1.20 million tons.
“Key risks to oil marketing companies include slower than expected decline in the economy, higher inventory losses, and phase out of FO (furnace oil) earlier than expectations,” Talreja said.
Cumulatively, in the first eight months (July-February) of FY19, the overcall sales (including FO) declined 27% to 12.16 million tons. A notable slowdown in economic growth in the country and contraction in large-scale manufacturing industry’s output have impacted sales of the products, mainly diesel.
Among companies, Attock Petroleum Limited (APL) outperformed in terms of overall volumes and posted a growth of 3% year-on-year to 143,000 tons during February 2019, while Pakistan State Oil (PSO) and Hascol posted decline of 9%, and 7%, respectively.
Product-wise, GO (unlisted company) remained the top performer in petrol sales and gained 2.3 percentage points in its market share to 8%. On the diesel front, Byco outperformed by gaining 1.7 percentage points in its market share to 7.5%, he said.
Published in The Express Tribune, March 5th, 2019.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.