- Demand drops to 15.3 million tonnes in FY24, lowest since FY06
- Government collects Rs1 trillion in petroleum levies
- Recent price cuts spark temporary demand surge
KARACHI: Petroleum demand in Pakistan has hit an 18-year low, with consumption falling to 15.3 million tonnes in the fiscal year 2023-24, which ended on June 30. Despite this decline, the government has collected an estimated Rs1 trillion in petroleum development levy (PDL) over the year.
The drop in demand is attributed to the PDL of Rs60 per litre on petrol and diesel, combined with the full pass-through of global energy price hikes to local consumers. Additionally, the economic slowdown, sluggish industrial output, high inflation, and elevated interest rates have discouraged industrial, commercial, and household consumption.
In June 2024, however, demand for petroleum products rebounded to a 19-month high of 1.45 million tonnes. This surge was due to significant cuts in energy prices and the increased use of expensive furnace oil-run power plants to meet the high electricity demand during the hot summer months.
Analyst Myesha Sohail of Topline Research reported that FY24 sales totaled 15.3 million tonnes, marking an 8% decrease from 16.6 million tonnes in FY23. “This marks an 18-year low, with sales volumes similar to those last seen in FY06,” she noted. Sohail added that oil sales have been declining for the second consecutive year, and the government collected an astounding Rs1 trillion in PDL, 15% higher than the target of Rs869 billion for the year.
Zayan Babar Khan, an analyst at Optimus Capital Management, highlighted that the 8% year-on-year decline in FY24 sales was due to slower-than-expected economic recovery, high fuel prices, and an influx of smuggled fuel. He expects a mild recovery in energy sales in FY25, driven by improved economic activity and a low base from FY24.
POL (petroleum, oil, and lubricant) sales increased by 4.1% month-on-month to 1.45 million tonnes in June 2024. This increase was led by a 15.4% rise in petrol sales and a 53.7% rise in furnace oil sales due to higher summer-driven demand, while diesel sales fell by 11.4% due to lower sowing activity and Eid holidays.
Petrol prices decreased by Rs17.5 per litre to Rs263.3 per litre in June 2024, and HSD’s ex-depot price decreased by Rs9 per litre to Rs269.1 per litre. Furnace oil sales rose by 53.7% month-on-month, reaching 106,000 tonnes in June 2024, due to the increased use of FO power plants for system stability and anticipated lower hydel generation.
Among listed companies, Attock Petroleum (APL) sales were 129,000 tonnes in June 2024, a 14% year-on-year fall. Pakistan State Oil (PSO) saw a slight 2% month-on-month decline to 649,000 tonnes, while Shell Pakistan (SHEL) experienced a 12% year-on-year and 6% month-on-month rise to 107,000 tonnes. HASCOL sales dropped 37% year-on-year and 8% month-on-month to 38,000 tonnes.
Story by Salman Siddiqui
