Oil sales down 21 per cent YoY

KARACHI: Pakistan’s oil sales fell 21 per cent YoY to clocked-in at 1.21 million tonnes in February 23 against 1.54 million tonnes in the same period of the last year, a statement said on Thursday.

The decline in the oil sales is mainly attributable to higher petroleum product prices, a slowdown in the economic activities, influx of smuggled petroleum products and lower demand for the furnace oil for power generation.

During the month, the prices of motor spirit (MS)) and high-speed diesel (HSD) have risen to their peak levels of Rs272/litre and Rs280/litre, respectively.

Similarly, on a MoM basis, the oil sales plunged 16 per cent. Cumulatively, in the eight months of FY23, the oil sales fell 19 per cent YoY to clocked-in at 11.69 million tonnes, compared with 14.45 million tonnes in the corresponding period of the last year.

The furnace oil (FO) sales witnessed a major decline of 47 per cent YoY and 17 per cent QoQ to clocked-in at 118k tonnes in February 2023.

The decline is primarily attributable to lower FO-based power generation during the month. Likewise, the HSD sales in February 2023 recorded a decline of 19 per cent YoY to clocked-in at 478k tonnes due to a slowdown in the economic activities and higher prices and influx of the smuggled Iranian diesel.

Similarly, the MS sales fell 15 per cent YoY to clocked-in at 648k tonnes due to higher prices.

Among the listed companies, CNERGY sales recorded the highest decline of 64 per cent YoY; followed by APL (down 23 per cent), PSO (down 19 per cent) and Shell (down 18 per cent) YoY, whereas, Hascol sales improved 5 per cent YoY due to lower base.

The Pakistan State Oil (PSO) strengthened its market share from 49.7 per cent in the eight months of FY22 to 50.9 per cent in the same period of FY23; followed by Hascol, which improved its market share by 0.3 percentage points.

On the flip side, the market share of CNERGY declined to 2.3 per cent during the period under review from 4.8 per cent in the eight months of FY22; followed by Shell and APL, whose market share declined by 0.1 percentage points in the eight months of FY23, compared with the same period of the last year.

The current pace indicates a shortfall in the petroleum development levy (PDL) collection.

As per our estimates, the government is likely to collect Rs371 billion in the eight months of FY23 on account of PDL. In March, the government raised the PDL on HSD by Rs5/litre, bringing it to Rs45/litre.

Despite this increase, the current rate of PDL collection suggests a shortfall in achieving the budgeted target of Rs855 billion.

The ongoing decline in the retail fuel sales (eight months of FY23 retail sales down 19 per cent) is a major concern for the government’s tax collection target. Even if the maximum PDL limit (Rs50/litre) is applied on both MS and HSD, the target seems unachievable.

Going forward, we expect the oil sales to remain under pressure due to higher prices, a slowdown in the economic activities and a decline in the automobile sales, coupled with the challenges on agriculture front. However, the oil marketing companies (OMCs) will reap the benefits of higher margins and APL remains our top pick in this sector (TP: Rs440/share).

Also Read

Nepra conducts public hearing on KE investment plan 2023/30

KARACHI: The National Electric Power Regulatory Authority (Nepra) has conducted a public...