POL products’ sales up 11pc in Jan

KARACHI: Consumption of petroleum products rose 11 percent year on to 1.76 million tons in January, showed market statistics on Friday, as falling oil prices have boosted consumer spending.
The dramatic fall in the global oil prices, which led to a monthly downward revision in domestic prices, act like a giant tax cut to the consumers and they took advantage of low prices to spend more. Oil price has fallen by more than 50 percent since last June.
During the same month last year, total energy off-take in the country stood at 1.58 million tons, said the statistics by the Oil Companies Advisory Committee.
The buying of motor gasoline (MS) and high speed diesel (HSD) noticeably grew 32 percent year on year to 399,000tns and 37 percent to 615,000tns, respectively in January 2015.
Industry experts attributed this growth in volume to panic buying at the end of the month following the petrol crisis in the northern parts of the country, particularly Punjab. The gasoline consumption witnessed five percent increase month on month for the same reason, they said. They added that another reason was that the price difference between petrol and compressed natural gas (CNG) was trimmed to 31 percent in January 2015 from 56 percent in the same month a year ago.
“Going forward, petrol sales will remain bullish in the wake of CNG load shedding and shrinking gap between CNG and petrol prices,” said Fatiq Bin Khursheed, an analyst at Optimus Capital Management.
Diesel off-take ballooned 16 percent month on month in January as consumers, anticipating its shortage, accumulated inventories, said market observers.
Though there has been a significant decline in furnace oil (FO) prices the sales didn’t record a rise. Its price (exclusive general sales tax) has recently dipped to Rs29,472/tn, or Rs722/ million British thermal unit (mmbtu), which is lower than the current captive natural gas tariff of Rs773/mmbtu.
In fact, the FO sales slid 13 percent year on year to 657,000tns in January 2015 as compared to 753,000tns in the same month a year ago.
The experts said the drop was a result of liquidity crunch faced by Pakistan State Oil and independent power producers.
However, sales of the third major energy product surged 13 percent in January over December because of the uptick in demand from private sector, including textiles, they added.
“The cheaper FO strengthens the case for (its) higher consumption amid gas outages in future,” said Khursheed.