High petroleum prices bring down oil sales by 21 pc

High petroleum prices bring down oil sales by 21 pc

KARACHI: Pakistan high petroleum prices have brought down the oil sales by 21 per cent year on year (YoY) in February 2023.

Analysts at Insight Research on Thursday said that Pakistan oil sales fell by 21 per cent YoY to clocked in at 1.21 million tons in February 2023 against 1.54 million tons in same period last year.

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The analysts attributed the decline in oil sales to: higher petroleum product prices, slowdown in economic activity, influx of smuggled petroleum products; and lower demand of furnace oil for power generation.

During the month, prices of MS (Motor Spirit, commonly known as petrol or gasoline) and HSD (High-Speed Diesel) have risen to their peak levels of PKR272/liter and PKR280/ltr, respectively.

Similarly, on MoM basis, oil sales plunged by 16 per cent. Cumulatively in 8MFY23, oil sales fell by 19 per cent YoY to clocked in at 11.69 million tons compared to 14.45 million tons in SPLY.

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Furnace oil (FO) sales witnessed a major decline of 47 per cent/17 per cent YoY/QoQ to clocked in at 118k tons in February 2023. The decline is primarily attributable to lower FO based power generation during the month.

Likewise, HSD sales in February 2023 recorded a decline of 19 per cent YoY to clocked in at 478k tons due to slowdown in economic activities, higher prices and influx of smuggled Irani diesel. Similarly, MS sales fell by 15 per cent YoY to clocked in at 648k tons due to higher prices.

Amongst the listed companies, CNERGY sales recorded the highest decline of 64 per cent YoY, followed by APL (23 per cent), PSO (19 per cent) and SHEL (18 per cent) YoY. Whereas, HASCOL sales improved by 5 per cent YoY due to lower base.

PSO strengthened its market share from 49.7 per cent in 8MFY22 to 50.9 per cent in 8MFY23, followed by HASCOL which improved its market share by 0.3ppt.

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On the flip side, market share of CNERGY declined to 2.3 per cent in 8MFY23 from 4.8 per cent in 8MFY22, followed by SHEL and APL, whose market share declined by 0.1ppt in 8MY23 as compared to SPLY.

The analysts estimated, government is likely to collect PKR371 billion in 8MFY23 on account of Petroleum Development Levy (PDL).

In March, the government raised the PDL on HSD by PKR 5/ltr, bringing it to PKR 45/PKR. Despite this increase, the current rate of PDL collection suggests a shortfall in achieving the budgeted target of PKR855 billion.

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The ongoing decrease in retail fuel sales (8MFY23 retail sales down by 19 per cent) is a major concern for government’s tax collection target. Even if the maximum PDL limit (PKR50/ltr) is applied on both MS and HSD, the target seems unachievable.

Going forward, oil sales to remain under pressure due to higher prices, slowdown in economic activities and decline in automobile sales coupled with challenges on agriculture front.