Petroleum consumption has been on a decline in the country for obvious reasons. Demand destruction for petroleum products has brought a slump in the imports of petroleum products as Pakistan is heavily dependent on imported petroleum products to meet its energy needs. Also, he government has been trying to reduce the import bill and control foreign exchange outflow, which has resulted in lower petroleum products imports in the country.
FY23 has seen a continuous decline in sales made by the oil marketing companies. Overall, decline in sales of petroleum products by the oil marketing companies in 9MFY23 fell by 21 percent year-on-year. Product-wise data showed a decline in all categories with FO, HSD, and MS dropping by 33, 25 and 16 percent year-on-year.
As per the latest data available on OCAC website, imports of high speed diesel for 8MFY23 continued to decline monthly on a month-on-month basis as well as year-on-year basis with the exception of December. Pakistan has been importing mostly over 40 percent of HSD during the eight months. Another factor for a decline in HSD imports has been that the demand of diesel in the country is being met through smuggled diesel from Iran due to the high price of the petroleum product making it uncompetitive against the Iranian fuel.
Imports of motor gasoline can be seen to exceed the overall sales of the product which is usually because of the lag. Nonetheless. MS imports have been making up for the consumption as local production falls short to meet demand. In the last 8 months of FY23.
On the other hand, imports of furnace oil have completely stopped since October-23 due to government’s policy and low demand from the power generation sector; while the imports of LNG and crude oil have fallen too.
Going forward too, FY23 sales are expected to remain dreary with expected decline to be around 25 percent year-on-year overall. This will keep a lid on imports as well.
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