Power sector slashes fuel oil use by 75pc in five months

KARACHI: The power sector slashed its consumption of petroleum products by nearly 75 percent in the first five months of the current fiscal year, as the country faced an economic slowdown and switched to cheaper alternatives, data from the oil sector showed on Friday.

As all the sectors saw a decrease in the consumption of petroleum products, the power sector topped the list, as fuel oil consumption in this sector dropped sharply.

The power sector, which accounted for the largest share of petroleum consumption in the previous year, used only 300,000 tonnes of fuel oil and diesel from July to November, compared to 1.15 million tonnes in the same period of 2023, the data showed.

The industry consumed 435,000 tonnes of oil during the period under review, compared to 480,000 tonnes in the same period of last year. The cement sector consumed 414,000 tonnes of petroleum products in the first five months, against the consumption of 459,000 tonnes in the corresponding period of last year.

The transport sector also consumed less in the months under review, compared to the same period of last year, as the total consumption in the sector stood at 5.5 million tonnes, compared to 5.9 million tonnes a year ago.

The drop in the consumption by the transport sector was mainly caused by road transport, which switched to smuggled Iranian diesel, which was supplied in large quantities in the first quarter of this fiscal, before the government launched a crackdown against the smuggling of diesel and petrol from Iran. The consumption by railways and aviation witnessed improvement during the period under review. The consumption by the government sector also recorded a decline during the period, as it dropped to 118,000 tonnes in the first five months, against 146,000 tonnes in the same period of the previous financial year.

In the power sector, K-Electric (KE) consumed 57,000 tonnes of petroleum products, compared to 387,000 tonnes same period least year, whereas Pakistan Electric Power Company (PEPCO) consumed 6,500 tonnes, compared to 82,000 tonnes a year back.

Hubco’s consumption remained zero, compared to 50,000 tonnes a year ago, and KAPCO also did not consume a single litre, compared to 130,000 tonnes in the first five months of the last fiscal. The consumption by Narowal Energy halved to 15,000 tonnes, compared to 33,000 tonnes in the first five months of the last fiscal.

Industry people attributed the decline to the economic slowdown, as well as the low consumption of fuel oil by power plants, which led the consumption figure to drop massively.

They said that smuggled petroleum products also dented the sales of the formal sector, and added that although the diesel consumption improved slightly after the crackdown against smuggling, the economic conditions were not so improved to push up the consumption.

Industry officials said the outlook for the petroleum sector is not encouraging, as the economic conditions were not expected to improve significantly in the near future. The demand for petroleum products is directly linked to the economic activity and the purchasing power of the people and unless the economy picks up and the people have more money to spend, the consumption will remain low, they added.