Pakistan’s petroleum sector faces 15% sales dip in first half of FY24

ISLAMABAD: The initial six months of the fiscal year 2024 (FY24) brought challenging times for Pakistan’s petroleum sector, marked by a significant 15 per cent decline in the sales of petroleum products.

The figures plummeted from nine million metric tonnes in the same period of the previous fiscal year to 7.686 million metric tonnes.

Petrol sales, in particular, witnessed a notable 7 per cent drop, dwindling to 3.57 million metric tonnes during the July–December 2023 period from 3.83 million metric tonnes in FY23.

This decline persisted despite a reduction in price, falling from Rs267.34 to Rs331.38 per litre in September 2023.

Similarly, the price of high-speed diesel (HSD) experienced a decrease to Rs276.21 from Rs329.18 in September 2023. However, diesel sales contracted by 6 per cent, reaching 3.16 million metric tonnes compared to 3.36 million metric tonnes in the first half of FY23.

Furnace oil (FO) sales painted a gloomy picture, plummeting by a staggering 61 per cent, standing at 0.56 million metric tonnes compared to 1.45 million metric tonnes during .

Despite this, there was a surprising 54 per cent surge in FO sales in November 2023, totaling 82,000 metric tonnes from October 2023. This spike was attributed to a shortage of RLNG and gas and reduced hydel power generation in the winter months, prompting a shift to FO-based power generation.

However, in December 2023, FO sales experienced a 36 per cent year-on-year drop, amounting to 79,000 metric tonnes, reflecting a 4 per cent month-on-month decline.

Overall sales of petroleum products continued to be under pressure, witnessing a 7 per cent decrease to 1.24 million metric tonnes in December 2023 from 1.33 million metric tonnes in December 2022.

Petrol and HSD sales during December 2023 further contributed to this slump, standing at 0.57 million metric tonnes and 0.51 million metric tonnes, respectively, an 8 per cent and 2 per cent decline compared to December 2022.

The deceleration in demand for petrol and diesel aligns with consumers’ cautious purchasing behavior, influenced by concerns over inflated utility bills and high food inflation.

Despite little decrease in petrol and diesel prices, consumers are limiting their fuel purchases according to their needs.

The overall automotive sector corroborates this trend, with a 50 per cent reduction in sales of cars, LCVs, pickups, and jeeps, totaling 33,638 units during July–November FY24, down from 67,107 units in the same period last fiscal year.

Two- and three-wheeler demand also witnessed a 12 per cent and 3 per cent decline, respectively. Truck and bus sales remained low, contracting by 48 per cent and 45 per cent during FY24.

Despite expectations for a marginal Rs1 per litre reduction in petrol prices, the government opted to maintain the current rates for the next fortnight, providing no relief to the inflation-hit masses in Pakistan.

It is evident that the persistently high prices of petrol and diesel are contributing to the sluggish sales of petroleum products, as indicated by the latest data.

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