In addition, there were severe fuel shortages at petrol stations in Central Punjab, as talks of price hikes remained rampant throughout the month. This led to dealers choosing to stockpile fuel instead of continuing with normal operations.
The situation was further exacerbated by OMCs which struggled to obtain timely shipments of petroleum products, due to the sharp decline of the PKR during the period. This resulted in delayed L/C clearances and significant exchange losses for the importing entities, ultimately leading them to restrict their supplies to dealers throughout the country.
Finally, lesser working days also contributed to the monthly decline of POL sales during February 2023.
On an
8MFY23 basis, total POL sales remained down by 19%YoY, stuck at 11.69 million
tons as against 14.45 million tons for the same period last year.
The decline is largely due to a drop in organic demand, as petroleum sales tend to be closely tied to the overall health of the economy. This is evidenced by a 3.7% decline in LSM activity during 1HFY23, a 7.3%YoY drop in power generation during the 7MFY23, and a 42%YoY decrease in auto sales during the same period.
The ongoing wave of inflationary pressures has also gripped the economy, resulting in consumers choosing to avoid leisurely travel amidst reduced purchasing power.
It is worth mentioning that the prices of both MS and HSD
have risen by PKR117 and PKR136 per liter to PKR267 and PKR280 per liter
respectively. These prices represent an increase of 78%/94% as against March 2022,
in line with the current government's plan to pass on the full cost of supply
and levies to consumers.
HASCOL emerged the most resilient amidst the broad based industrial decline as total volumes for the month was reported at 27,000 tons, up by 4%MoM and 5%YoY. This came on the back of HASCOL’s approach to remobilize most of its retail depots by CY22 end, as most closed up due to its dealer network fallout back in CY20. On the retail front (MS, HSD, HOBC), PSO and APL ended the 8MFY23 period with market shares standing at 49.2%/8.5%. Finally, share of smaller players (bottom 25) stood at 6.3% as against 6.6% last month.
With two-thirds of the year behind us – the demand for petroleum products hasn't looked this bad in years since the Covid’19 pandemic struck. Overall, the broad based economic slowdown continues to haunt the sustainability of the sector as risen prices and dampened industrial/commercial activity have kept offtakes under pressure.
Rampant inflationary pressures in the coming quarters alongside a depressed GDP outlook for the remaining months compels the analysts to assume negative volumetric growth for the industry.
