Refinery sales continue to fall

Reliance on imports increases to 39%.


Express November 24, 2011

KARACHI: Refinery sales fell 5% in October as the monthly trend showed a sharper decrease in petrol and diesel sales.

Improvement in furnace oil by 27% saved the ship from capsizing as petrol and diesel sales dropped 30% and 16%, respectively, according to an InvestCap research note.

Likewise, the sector’s white oil yield went down by 32%, although it is still better-off compared with the same month last year.

Further down the distribution channel, overall sales by oil marketing companies (OMCs) during October went up 27% MoM. Despite higher sales of furnace oil by local refineries, imports of the product went up by massive 56% depicting additional demand for oil-based power generation on the back of ongoing gas shortfall, adds the note.

The contribution of domestic refineries in overall sales was therefore down to 33% in October 2011 from average 39% during the first quarter of fiscal 2012, with the rest being met through imports.

Although, debt swap by the government is anticipated to address liquidity issues temporarily, the problem still remains far from being resolved, says the note. Despite this hiccup, refinery sales during the current financial year continued to stay strong as it went up by 8% on a yearly basis.

Attock Refinery and Byco appear to be the most affected in terms of monthly decline in sales, although improved refining margins are expected to provide a cushion against drop in sales.

Published in The Express Tribune, November 25th, 2011.

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