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Friday, July 12, 2024  
05 Muharram 1446  

Oil sales decline in June as high prices dent demand

A further slowdown in diesel and petrol sales is expected as the government has decided to impose PDL and sales tax
A representative image.
A representative image.

Total petroleum and lubricant sales clocked in at 1.93 million tons in June 2022, a decrease of 11% on a month-on-month basis while it remain unchanged on a year-on-year basis.

On a monthly basis, a major decline in sales was witnessed in petrol and high-speed diesel (HSD) sales, which declined 12% and 16%, respectively.

“We believe that significant rise in both diesel and petrol prices are the major reason behind decline in retail sales,” said Abdullah Umer, an analyst at Ismail Iqbal Securities.

During FY22, sales of total petroleum products increased by 16% on YoY to 22.595 million tons versus 19.45 million tons in the same period last year.

Nov POL sales clock in at 1.75m tons

Dissection of data revealed that growth was witnessed in all categories; MOGAS (Motor Gasoline), HSD and FO (Furnace Oil) with offtake undergoing a jump to 8.95 million tons, 8.87 million tons and 4.04 million tons, up by 9%, 15% and 35% on YoY against the same period last year, respectively.

“Healthy economic activities, robust agriculture activities, upbeat automobile sales and curb of HSD smuggling remained major drivers behind such stupendous growth,” said the brokerage house.

However, going forward, the brokerage house anticipated a further slowdown in diesel and petrol sales as the incumbent government has decided to manage petroleum product prices by levying Petroleum Development Levy (PDL) and sales tax even if international oil prices decline.

“Increase in carpooling, use of public transport, a shift in consumer behavior (shift to two-wheelers from passenger cars), high inflation and an overall slowdown in economic activities are likely to further dent retail fuel demand in the upcoming months.

“On the other hand, we expect RFO sales to remain intact due to likely drop in RLNG & imported coal based power generation,” it added.

In a late-night development on Thursday, the government announced another hike in the prices of petroleum products, with the new ex-depot price of petrol going up to Rs248.74 per litre (after a hike of Rs14.85), and diesel to Rs276.54 (after a hike of Rs13.23).

The old price of petrol was Rs233.89 per litre while diesel was at Rs263.31 per litre.

In the pricing structure, a petroleum levy of Rs10 had been imposed on petrol. Similarly, a levy of Rs5 each has been added to the per-litre prices of high-speed diesel, kerosene, and light diesel oil.

POL products’ prices further jacked up

Announcing the government decision, Finance Minister Miftah Ismail said that these prices would be effective from 12am night to make up for the Rs-230 billion loss incurred during the fiscal year closed on June 30 2022.

The increase in these prices was inevitable because the country’s budget deficit historic high of Rs5 trillion, he said.

Miftah said that the government tried to provide relief as much as possible but as the prices increased considerably, there was no other option to increase prices.

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