KARACHI: Petroleum oil sales plunged to a decade low of 1.33 million tons in November 2018 mainly due to a significant hike in prices and economic slowdown in the country.
Industry officials and analysts said sales of petroleum products had dropped drastically after they became unaffordable to tens of thousands of car drivers, industries and commercial production houses due to a consistent increase in their prices in recent months.
Besides, the drop was also due to rampant smuggling of some of the refined products like diesel from neighbouring country Iran, government’s strategy to abandon the use of furnace oil for power production, low industrial output and economic slowdown.
“Rising prices for the end-users have definitely cut into (oil) demand,” Byco Petroleum Head of Communications Shehryar Ahmad told The Express Tribune.
Petrol (gasoline) price has shot up to near Rs100 per litre in retail compared to Rs70 before oil prices started increasing in the international market, around the time Pakistan Tehreek-e-Insaf (PTI) formed government in August following July 25 elections, he said.
For the first time, the current government reduced petroleum product prices last week following the plunge in international crude prices.
A massive 31% depreciation of the rupee against the dollar since December 2017 also made oil imports expensive and contributed to higher retail prices, he said.
Topline Securities’ analyst Shankar Talreja said in a note that “during November 2018, oil sales came in at 1.3 million tons (around 11-year low), down 32% year-on-year mainly dragged down by furnace oil (down 67% year-on-year). Excluding furnace oil, oil sales fell 22%, year-on-year”.
“A steep decline in furnace oil sales was on the back of slower offtake…shift of national energy mix to other alternatives like RLNG (re-gasified liquefied natural gas) and coal,” he added.
In the white oil segment, sales of petrol and diesel dropped by 5% and 31% year-on-year, respectively during November 2018.
The drop in sales came “due to increase in petrol prices by 29%, said Talreja.
Published in The Express Tribune, December 5th, 2018.