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Demand for Petroleum Products Drops by 16.5%

The overall demand for petroleum products in Pakistan has remained sluggish at 1.66 million tonnes amid an economic slowdown in the month ended October 31, 2022. This is a 16.5% drop when compared to the same period of last year.

According to data, during the first four months (July-October) of the current fiscal year 2023, the sale of petroleum products decreased by a notable 22% to reach 6.15 million tonnes, as compared to 7.85 million tonnes in the same period last year. Despite some respite in the global markets, demand has remained low in the wake of inflated oil prices in the country since May 2022. Besides, a notable drop in industrial activities including a major drop in car sales, a significant decrease in oil-based electricity generation and partial recovery in agricultural activities in the post-flood era, have also contributed towards keeping the fuel demand down.

Speaking to the Express Tribune, Head of Research at Arif Habib Limited (AHL), Tahir Abbas revealed that demand for petrol dropped by 11% to reach 0.68 million tonnes in October this year, as compared to 0.77 million tonnes in the same period last year. The sale of high-speed diesel (HSD) dropped 15% to 0.71 million tonnes in October, as compared to 0.84 million tonnes in the same month of last year. Following the government reducing its reliance on oil-based electricity generation, the demand for furnace oil also fell sharply by 37% year-on-year and 33% on a month-on-month basis to 0.20 million tonnes in October.

Likewise, the demand for electricity has itself reduced by 10-12% in October. The drop helped the government reduce its dependence on expensive oil-based power generation in the presence of comparatively cheaper sources like hydel, nuclear, local coal and local gas, he added. Among market performers, Pakistan State Oil (PSO) remained the indisputable market leader.

As per data, PSO alone accounted for around 50% (0.85 million tonnes) of the total petroleum sales in October 2022. It was followed by Attock Petroleum Limited which sold 0.14 million tonnes. Shell Pakistan came at number three with sales of 0.13 million tonnes. Hascol, once a top performing company, accounted for a mere 0.03 million tonnes of petroleum product sales in October.

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