POL sales up 7 percent in November

KARACHI: The overall sales of petroleum, oil, and lubricants (POL) increased 6.7 percent to 1.42 million tons in November 2019 compared to 1.33 million tons last November, Oil Companies Advisory Committee’s data showed on Tuesday.

However, POL sales declined 11.2 percent during the July-November period, hit by government’s decision to increase petrol and diesel prices in November.

The government had increased prices of motor spirit (MS) by Re1/litre and high-speed diesel (HSD) by Re0.25/litre as per the recommendation by Oil and Gas Regulatory Authority (OGRA) in November.

MS sales registered a drop of 14.97 percent MoM, and rise of 6.7 percent YoY, with the largest volumetric drop among POL products. The sales went down 102,00 tons to reach 579,000 tons in November.

Analyst Noor Us Sabah of Optimus Capital Management said, “The government increased petrol prices by Re1/litre in November that consequently impeded its demand.”

A similar trend could be seen in July-November 2019, where total POL sales declined 5.0 percent to 7.39 million tons from 7.74 million tons in the same period last year.

Furnace oil (FO) sales dipped 27.7 percent MoM, hinting toward lower FO consumption by IPPs in the power sector.

Analyst Ali Zaidi at JS Global Capital said, “While the 28 percent contraction in furnace oil sales (MoM) may seem substantial, the 15 percent decline in MS was the leading cause of decline given its share in the industry’s product mix.”

“Central Power Purchasing Agency (CPPA) most likely preferred off taking RLNG versus FO for power generation in a bid to relieve RLNG pileup in the gas distribution system,” Optimus Capital Management said in its report.

However, YoY sales of FO jumped 8.5 percent to 144,000 tons. HSD volumes on the other hand, reported the lowest drop in volumes, despite the increase of Re25/litre. Off-take of the oil declined 4.4 percent MoM to 621,000 tons, while growing 4.3 percent YoY.

Pakistan State Oil (PSO) and Attock Petroleum Limited (APL) were the only oil marketing companies (OMC) to register YoY growth of 20.6 percent and 13.9 percent YoY in total POL sales, to 665,000 tons and 149,000 tons, respectively.

PSO gradually regained its market share and continued to lead the OMC market, having improved its market share by 6.3 percent to 47 percent so far in FY20.

Interestingly, Hascol lost a similar portion of the pie in the same period. It seems as though PSO’s retail presence alone has allowed it to capture the additional market share.

APL, despite having lost its market share by 0.2 percentage points, has also benefitted from Hascol’s dampened sales as it became the second largest OMC by volumes during July-November FY20.

Shell Pakistan Limited (Shel) managed to become the third largest OMC with regards to volumetric sales as it increased its market share by 0.2 percentage points to 8.2 percent, while the cumulative share of other OMCs remained stagnant.

“With regards to Shel, we would like to highlight that the company’s market share has not changed much over the recent past, which goes in line with the management’s aim to increase non-retail revenues,” Zaidi added.