In the face of soaring prices and a severe economic slowdown, the demand for petroleum oil products (POL) in Pakistan plummeted to a 17-year low of 16.61 million tonnes, marking a 27% year-on-year (YoY) decline in the fiscal year 2023.
According to Topline Research, these figures represent the lowest sales numbers for oil marketing companies (OMCs) since FY06, excluding the COVID-impacted year of FY20. In FY06, OMC sales were recorded at 14.6 million tonnes, while sales in FY20 stood at 16.40 million tonnes, slightly lower compared to FY23.
The sharp increase in petroleum product prices came after the government withdrew substantial subsidies worth Rs100 billion per month on sales to end-consumers in May 2022. Furthermore, as part of the International Monetary Fund (IMF) loan conditions, the government imposed a petroleum development levy (PDL) of Rs50/litre.
The average sale price of high-speed diesel (HSD) in FY23 was Rs255/litre, compared to Rs145/litre in FY22, marking a significant 76% increase, as reported by Topline Research. Similarly, the average sale price of petrol (MS) in FY23 was Rs245/litre, up from Rs148/litre in FY22, representing a surge of 66%.
In terms of specific products, furnace oil (FO) and HSD experienced major declines of 49% and 28% respectively, while petrol sales decreased by 17% in FY23.
Experts attribute the decline in HSD and MS sales to the higher product prices in FY23. Additionally, the drop in demand for FO from the power generation sector contributed to the decline in FO sales.
Excluding furnace oil, the sales of OMCs in FY23 amounted to 14.5 million tonnes, reflecting a YoY decline of 22%. Arif Habib Limited highlighted that the sales of HSD dropped by 28% to 6.37 million tonnes in FY23, the lowest level since the availability data from FY07. Similarly, the sales of petrol (MoGas) decreased by 17% to 7.42 million tonnes in FY23 compared to FY22.
In terms of market share, Pakistan State Oil’s share slightly declined to 50% in FY23 from 51% in FY22. The decrease was primarily due to the decline in FO sales by 64%, exceeding the industry’s decline of 49%, according to Topline.
Meanwhile, Shell’s market share remained stable at 7.6% in FY23 compared to 7.7% in FY22, and Attock Petroleum Limited saw its share increase to 9.6% in the year under review from 9.3% in FY22.
However, there was a recent uptick in sales, as petroleum product sales improved by 4% to 1.30 million tonnes in June compared to the previous month of May 2023. This increase was primarily driven by a 7% month-on-month surge in petrol (MS) sales and a 10% increase in FO sales, driven by higher demand for power generation. HSD sales remained flat during the same period.
Total oil sales excluding furnace oil clocked in at 1.2 million tonnes in June 2023, up 3% MoM.
Published in The Express Tribune, July 5th, 2023.
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