Diesel consumption declines as rains pause agriculture demand

KARACHI: Diesel consumption plunged to average 15,000 tonnes per day from 25,000 tonnes per day in July, mainly on the back of rains in the country along with the high price of the fuel.

According to the oil sector, the rainy month of July halted agricultural activities in almost the entire country, which slashed diesel demand that is mostly used as a fuel in the agriculture sector. Generally, demand for diesel is connected with harvesting season, when consumption increases to run tractors, harvesters, threshers, and other agriculture machineries. Thus the sales of diesel surge.

“Harvesting season is over and now rains are lashing almost the whole country, putting breaks on agriculture activity,” a top executive of an oil firm told The News.

Low consumption has led to diesel stockpile of up to 660,000 tonnes in the country, which was sufficient for the next days, keeping in view the current daily consumption of the fuel, the executive said.

Usually, diesel stocks suffice for 20 days at the most; however, this lower consumption pattern has allowed the stockpile to grow to a level where the fuel might be enough to meet the demand for the next 50 days, the official said.

Another factor that dented diesel demand was the massive spike in its price. However, the official said that rains still contributed more to this decline, not just because of halt in agriculture activities, but also because of slowdown in the transport sector. “Fewer vehicles are plying on the roads due to heavy rains across the country,” he added.

Petrol consumption has also slumped by 10,000 tonnes per day to 20,000 tonnes compared to 30,000 tonnes previously. “This can mainly be attributed to the price hike of petrol, as people are not bringing out their vehicles on the roads to cut back on fuel expenses,” the official said. Petrol stocks in the country stand at 650,000 tonnes more than the required quantity for the time being. For now, the price of diesel stands at Rs236.96 per litre and petrol stands at Rs231.14 per litre. This lower consumption trend of both diesel and petrol could help Pakistan cut the imports of petroleum products in the coming month.

June consumption of these fuels put a heavy load on Pakistan’s foreign currency reserves. Import of petroleum products went up 133.90 percent in value and 28.28 percent in quantity. Crude oil imports increased 80.18 percent in value and 5.26 percent in quantity during the period under review while those of liquefied natural gas increased by 90.65 percent in value. Liquefied petroleum gas imports jumped by 39.70 percent in value in FY22.