By Staff Reporter
KARACHI: Pakistan’s oil sales experienced a sharp decline, with a 46 percent year-on-year drop to 1.171 million tons in April. The country’s total sales during the July-April period of FY23 also suffered a significant setback, decreasing by 24 percent to 13.970 million tons.
The cause for the downturn is attributed to the economic slowdown in the region and the influx of smuggled Iranian petroleum products, which have been undermining Pakistan’s legitimate oil sales.
Although petroleum product sales showed a growth of 6 percent month-on-month in April compared to March in this financial year, furnace oil (FO) consumption in April was 72,000 tons, down from 461,000 tons in April 2022, and sales dropped 16 percent month-on-month.
The July-April FY23 FO sales were 1.866 million tons, down 40 percent from the same period last fiscal year.
Similarly, diesel sales plummeted by 50 percent to 461,000 tons in April 2023 from 919,000 tons in April 2022, and a 28 percent drop was recorded in 10MFY23 to 5.283 million tons, although there was a 16 percent month-on-month sales increase.
Petrol sales in April 2023 saw a 25 percent year-on-year decline to 580,000 tons but recovered by 4 percent month-on-month. Total petrol sales in 10MFY23 fell by 17 percent to 6.173 million tons.
An analyst at Topline Research attributed the April sales decline to a massive drop in FO and diesel sales, while the economic slowdown caused a decline in all major petroleum products in 10MFY23.
The higher inflationary environment, especially petrol and diesel prices, had a major impact on demand.
The analyst predicts future depressed oil sales due to high inflationary pressure and the government’s inability to lower oil prices.
Insight Research noted in a market note that domestic sales were hit by the influx of Iranian petroleum products, while demand for furnace oil remained low due to low power generation.
The report mentioned that the widespread availability of Iranian diesel, particularly in the country’s southern region, is hurting diesel uptake due to a significant price differential between Pakistani and Iranian diesel.
Furthermore, foreign exchange scarcity to import petroleum products is further causing authorities to turn a blind eye to this issue.
Senator Anwarul Haq Kakar informed the Senate Standing Committee on Finance that around 20-30 million litres of Iranian oil were being smuggled into Pakistan every day.
The Minister of State for Finance, Aisha Ghaus Pasha, told the meeting that the government had devised a multi-pronged strategy to curb smuggling, and the prime minister was looking into the issue.
Meanwhile, Attock Refinery Limited (ARL) reported in a stock filing on Wednesday that stocks of diesel in the refinery reached a high level with very little or no ullage in storage tanks.
The refinery is left with no option but to shut down its main distillation unit of 32,400 barrels per day for five days to manage the critically high diesel stocks and carry out essential maintenance, including that of allied downstream units.
Diesel lifting by the oil marketing companies (OMCs) from ARL has remained low during the last two months due to multiple reasons, including the possible inflow of smuggled products.
ARL said the refinery would partially operate at around 25 percent capacity during the said period, and adequate inventories of products are available to meet the demand.
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