KARACHI - The refinery throughput reduced by 10.6 per cent on year-on-year basis in the first two months of the current fiscal year (2MFY10) due to reduced POL product margins and lingering circular debt issue, says a report. The POL products margins initially fell along with falling intl crude oil prices, however, failed to follow the recovery in intl crude oil prices. In the period under review, margins on HSD and kerosene were slashed to an avg. of 4.6pc and 5.4pc from an avg. of 13.3pc and 16.0pc recorded in FY09 respectively. On the other hand, margins of HSFO, usually traded at a discount to intl crude oil improved to -13pc from -22pc in FY09, though still remaining in the red. The notorious circular debt also continued to weigh down refinery operations. Moreover, the liquidity constraints caused refineries to face difficulties in paying for crude oil imports and inflating their working capital requirements. The said factors have forced the refineries to operate far below their optimal level at 63pc of their actual capacity. Therefore, the resolution of circular debt as well as improved POL margins are expected to play a pivotal role in reviving refinery utilization levels. Company wise data reveals that PARCO, PRL and ATRL functioned at 77.8pc, 77.6pc and 78.5pc capacity respectively, while NRL throughput was at 34.6pc of its capacity due to plant maintenance shutdown. Moreover, BOSI utilized only 45.8pc of its capacity, lack of diversification increasing its vulnerability to the above mentioned factors. Amongst the individual products, throughput of HSD and FO, having a cumulative share of 70pc in 2MFY10, plummeted by a massive 12.5pc YoY and 14.0pc YoY respectively. Other products including Mogas, Kero, JP-8 and LDO followed the same trend as their offtake declined by 0.9pc YoY, 34.5pc YoY, 10.4pc YoY and 24.5pc YoY correspondingly. While HOBC and JP-I witnessed a surge in their offtake by 23.6pc and 7.4pc respectively. Apart from an exchange of positions between ATRL and NRL from FY09 market shares, refinery market shares maintained their previous pattern.