POL sales decline 13pc in Jan

KARACHI: Overall petrol, oil, lubricants (POL) sales in January 2017 fell 13 percent year-on-year to 1.79 million tons, due to lower furnace oil (FO) sales likely on account of lower electricity generation from FO power plants, provisional data suggests.

An analyst at Taurus Securities said, “As anticipated, FO sales declined by massive 49 percent to 0.39 million tons as lower electricity was generated from FO power plants, whereas demand for high speed diesel (HSD) and motor spirit (MS) remained strong surging 10 percent and 8.0 percent, respectively.” Faizan Ahmed at JS Global Capital said FO again remained the major culprit behind plummeting sales. “Going forward, our discussion with industry sources suggests that the last of FO imports will come in March 2018, following which imports of FO are likely to be stopped,” the analyst added. On monthly sequential basis, FO, HSD, MS volumes dropped 9.0 percent, 7.0 percent and 2.0 percent. Resultantly, total POL volumes went down by 4.0 percent.

In the first seven months of the current fiscal year, retail fuels sales escalated 9.0 percent to 1.3 million tons mainly due to robust growth in automobile sales, and ongoing infrastructure activities. On the contrary, FO sales remained on downward trajectory declining 18 percent. Resultantly, cumulative POL sales volumes registered meagre decline of 0.3 percent to 14.9 million tons in these seven months.

The Taurus Securities report said retail fuels volumes would continue to grow on the back of higher automobile sales and infrastructural development, thus backing the positive stance on the sector.

“However, FO volumes would continue to drop owing to availability of LNG as government plans to gradually reduce reliance on oil-based power plants to other power sources ie LNG and coal, and shut-down less efficient power plants,” the report said.

On company wise basis in seven months, Hascol further grasped market share by 321bps to 11.1 percent, whereas Attock Petroleum’s market share remained at 8.0 percent. However, Pakistan State Oil market share was obstructed to 54.2 percent primarily owing to declining FO sales.

Analysts assert a positive stance on the sector in the backdrop of reducing credit sales (FO), inflation linked margins, deregulation of HSD to minimise chances of inventory losses, and growing retail fuels market. Pertinently, soft increase in prices of crude oil will also possibly translate into inventory gains.