PSO issues tender for October fuel procurement
KARACHI: The state-owned Pakistan State Oil (PSO) has floated several tenders for the supply of petroleum products to ensure ample availability of fuel in the upcoming winters.
PSO has invited bids for the supply of three motor gasoline cargos of 45,000 tonnes each in October 2021, along with two standard size cargo each of high-sulphur fuel oil (HSFO) and low-sulphur fuel oil.
Market sources said the PSO’s stock position was at a comfortable level and there was no threat to the smooth supplies across the country.
The PSO has largely scaled back its fuel oil imports since the end of 2017, as the country turned to liquefied natural gas (LNG) to fuel its power sector.
Before turning to LNG, Pakistan was a major importer of fuel oil with the monthly imports averaging at around 400,000 tonnes to 650,000 tonnes of fuel oil in 2017.
The oil marketing companies (OMCs) witnessed 18 per cent rise in their volumetric sales during FY21, with retail fuel (Mogas and HSD) sales recording an increase of 14.2 per cent during the period.
This is primarily attributable to 48.50 per cent rise in the auto sales and reinitiation of transport, as overall aggregate demand in the economy surpassed the pre-Covid levels. The PSO’s total volumes climbed 23.50 per cent during the same period.
“Moving forward, the economy is expected to grow at a rate of 4.8 per cent, which would improve [the] industry’s retail sales even further. To recall, Mogas and HSD sales are highly correlated with the overall health of the economy,” an analyst at Insight Securities said.
Analysts anticipate impressive growth in retail fuel segment due to the improved outlook on the economic front to boost demand, continued investments in storage capacities, revamped policies and measures by the regulator to improve the existing players’ confidence, modernisation plans in refinery subsidiary (PRL) to enhance the PSO productivity in the subsequent future.
However, Insight Securities has flagged piling up re-gasified liquefied natural gas (RLNG) receivables, posing a threat to the liquidity position; shifts in retail fuel demand in future due to the upcoming energy substitutes, delays in the circular debt resolution; abrupt volatility in the international crude prices; and increased marketing and distribution expenditures, going forward, due to the rising competition.
Yousaf Rehman at KASB Securities said that expediting action against the supply of smuggled petroleum, changing the pricing mechanism to insulate the OMCs against the oil price volatility, and a fundamental shift towards sustainable economic growth aiding long-term sales prospects will bode well for the sector.
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