Despite energy shortfall, country's oil consumption declined by 3 percent in FY12 to 19.1 million tons as against 19.7 million tons recorded in FY11. "This is the 2nd consecutive year that oil consumption has posted a decline", analysts said. The reduction primarily came from 7 percent decline in FO (Furnace oil) sales which account for approximately 45 percent of total oil consumption in Pakistan.
"Despite electricity shortage, cash problems amid circular debt prompted power units to consume lower furnace oil for electricity generation which declined by 7 percent to 8.4 million tons", Nauman Khan, an analyst at Topline Securities said. According to estimates, power sector consumed 5 percent lower FO as government increases gas supplies by 4 percent which is cheaper source of generation for power units as power sector has been given priority over others sectors in terms of gas allocation, he said. Moreover, liquidity constraints with OMCs also led to restricted FO supplies, he added.
Gasoil (commonly known as HSD or diesel) sales declined by 1 percent to 6.8 million tons. "However, we believe that in FY12 diesel consumption could have been much higher as local diesel market is also infiltrated by smuggled diesel from Iran whose share in local market has increased in past few months", he said.
Reason being the rising price disparity between the two products as Pakistani diesel is now more costly that Iranian diesel after continuous rise in taxes on local product, he added. The sales of gasoline sales (petrol) depicted a robust growth of 21 percent on the back of growing auto market and rising gas curtailment to CNG sector prompting consumers to switch towards gasoline. Its share of total oil consumption rose to 14 percent in FY12 as against 12 percent last year, while it was 8 percent in FY08.
Amongst the individual companies, PSO continue to remain the major victim of circular debt that has approximately 80 percent market share in FO segment. The company's sales declined by 3 percent in FY12 to 12.4 million tons, but was able to maintain its market share.
APL on the other hand benefited from higher petrol sales with company's sales increasing by 13 percent in the year. Further, company expanded its market share by 1pps to 8 percent in FY12. On the other hand, major dent came to Shell sales in FY12, down 29 percent, as company lost its ground in HSD sales that contribute over 55 percent to Shell's volume. The company's market share has declined by 3pps in the year to 10 percent from 13 percent.