HSD imports almost double in April as smuggled fuel supply dries up

KARACHI: The import of High Speed Diesel (HSD) almost doubled in the month of April, exceeding 200,000 tonnes mark for the first time in the current fiscal year, compared to the preceding month of March, despite its sluggish demand in the country.

According to the data compiled by the oil sector, the country imported 202,843 tonnes of HSD in the month of April, against 109,749 tonnes in the month of March.The demand for HSD didn’t see any substantial improvement in the first three weeks of April; however, things started improving in the last week when its demand picked up after a reduction in the supply of smuggled diesel from Iran.

Although the refineries have a huge stock of HSD after its low upliftment from the oil marketing companies, the country imported a huge quantity of HSD.Pakistan State Oil (PSO) - the state-owned OMC - imported HSD during the month. “Despite the low demand for HSD, PSO had to import it because of its contract with Kuwait Petroleum Corporation (KPC),” sources in the sector said.

They said that the import was planned in November last year for the next six months and PSO is bound by an agreement with KPC for the import of HSD under the contract. Despite this contract, PSO cancelled one vessel out of the five that were planned due to the low demand for HSD in the last month.

The demand for HSD jumped to 23,000 tonnes per day in recent weeks compared to 14,000 tonnes in the month of March when Iranian smuggled diesel captured the local market, adversely affecting the sale of HSD from the formal channel.

Sector people said that the country now has 500,000 tonnes of HSD stock, which saw a reduction of 100,000 tonnes in the recent week. They attributed the growth in demand to some strict action against smuggling as well as supply hurdles after rains inundated various areas of Balochistan.

On the other hand, refineries have expressed concerns over the import of HSD when huge stocks of HSD are lying with them. They noted that when the demand is sluggish, then there must be some option in the contract of PSO to reconsider the import of HSD when the local production of HSD in the refineries is more than the requirement in the country.

They said that low upliftment of HSD is still an issue for the refineries as Attock Refinery had to shut down its operations in April, and Cnergyico also announced it would shut down if the upliftment of HSD didn’t see any improvement.