Despite a 9% increase on a month-on-month basis, the overall demand for petroleum products in Pakistan has remained sluggish at 1.66 million tonnes amid an economic slowdown in the month ended October 31, 2022. The demand for petroleum products has increased by almost 9% in October compared to the previous month. This, however, is a 16.5% drop when compared to the same period last year.
According to Arif Habib Limited (AHL), cumulatively, in the first fourmonths of the current fiscal year 2023 (FY2023), the sale of petroleum products decreased by a notable 22% to reach 6.15 million tonnes, as compared to 7.85 million tonnes in the same period last year. Despite some respite in the global markets, demand has remained low in the wake of inflated oil prices in the country since May 2022. Besides, a notable drop in industrial activities including a major drop in car sales, a significant decrease in oil-based electricity generation and partial recovery in agricultural activities in the post-flood era, have also contributed towards keeping the fuel demand down.
Speaking to the Express Tribune, Head of Research at AHL, Tahir Abbas said, “Oil sales have remained dull in the wake of an overall economic slowdown in the country.” “A recovery of almost 9% in sales on a month-onmonth basis is seen due to low base effect, meaning that economic activities and the sale of petroleum products has shrunk significantly in September 2022 due to the recent floods,” he added. “The slow and gradual rebound in economic activities from almost a complete halt, mainly in the agricultural sector because of the rainfall and floods, helped a partial revival in oil sales in October,” explained Abbas. He further noted that “A major 57% drop in car sales, in the first threemonths (Jul-Sep) of FY2023, also kept petrol sales down.
Demand for petrol dropped by 11% to reach 0.68 million tonnes in October this year, as compared to 0.77 million tonnes in the same period last year.” “The sale of high-speed diesel (HSD) dropped 15% to 0.71 million tonnes in October, as compared to 0.84 million tonnes in the same month of last year. The demand for HSD, however, improved by 37% in the month under review compared to the previous month due to the beginning of wheat sowing season amid receding floodwater in the agricultural fields,” he added. “Following the government reducing its reliance on oil-based electricity generation, the demand for furnace oil also fell sharply by 37% year-onyear and 33% on a monthon-month basis to 0.20 million tonnes in October,” he further added.
“Likewise, the demand for electricity has itself reduced by 10-12% in October. The drop helped the government reduce its dependence on expensive oil-based power generation in the presence of comparatively cheaper sources like hydel, nuclear, local coal and local gas,” said Abbas. Abbas noted that the state-owned Pakistan State Oil (PSO) remained the indisputable market leader. As per data, PSO alone accounted for around 50% (0.85 million tonnes) of the total petroleum sales in October 2022. It was followed by Attock Petroleum Limited which sold 0.14 million tonnes. Shell Pakistan came at number three with sales of 0.13 million tonnes. Shell, however, made no sales of furnace oil in the month of October. Hascol, once a top performing company, accounted for a mere 0.03 million tonnes of petroleum product sales (excluding furnace oil) in October.
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