Energy supplies increase 3.9% in fiscal 2010

Primary energy supplies are likely to have grown 3.9 per cent in the fiscal year 2010 due to an 8.8 per cent increase in oil sales, according to an analyst.

Modest growth in primary energy supplies indicates that suppressed demand because of lower power generation capacity is still reflected in primary energy demand, said Elixir Securities analyst Azfer Naseem.

Gas production also increased 1.5 per cent in the fiscal year 2010 against last year.

The primary energy supplies are the sum of all energy resources like coal, oil, gas, hydel and others. These resources are converted into gasoline, natural gas, electricity and many other energy carriers.

Historically, the growth rate of primary energy supplies has been closely tracked with the Gross Domestic Product (GDP) growth, informed Naseem.

The supplies growth rate has averaged 4.7 per cent during fiscal year 2000 to 2008 against an average GDP growth of 5.2 per cent during the same period.

Modest energy demand growth ahead

Energy demand growth will likely average 4 per cent in the coming years with the GDP growth likely at average 4 per cent to 5 per cent, said Naseem.

However, impact of suppressed demand shall lead to above normal energy demand growth in fiscal year 2011.

Strong volumes for OMCs to continue

Strong growth is expected to persist in the fiscal year 2011 for oil marketing companies (OMCs) after strong 8.8 per cent growth in oil sales in fiscal year 2010.

The expected growth in gas supplies of 6 per cent in the fiscal year 2011 may raise some concerns, said Naseem.

The new gas based power capacities commencing during May to August shall consume almost half of the additional supplies at 80 per cent utilisation with the existing gas shortfalls expected to more than suffice for the remainder.

Oil sales are expected to rise by 8 per cent to 9 per cent in the fiscal year 2011. High sulphur fuel oil (HSFO) volume is expected to rise by 15 per cent, with new power capacities alone adding 1.3 million tons to the fiscal year 2010 volumes. Petrol volumes are likely to rise by 12.5 per cent whereas high speed diesel volumes shall also recover given revival in the industrial activity.

Published in The Express Tribune, July 20^th, 2010.