LAHORE - Oil sale has posted a strong growth of 10 per cent annually during previous month to 1.6 million tons while Furnace Oil and HSD recorded massive growth in imports, showing an increase of 101 per cent and 42 per cent monthly respectively.

High growth of oil sale was mainly on account of strong demand pull-back in Motor Spirit (MS) and High Speed Diesel (HSD) by 18 per cent YoY (2 per cent MoM) and 14 per cent YoY (-4 per cent MoM), respectively, as extreme scarcity of CNG revitalised the demand of conventional fuels, observed energy experts of AHL. Similarly, lower hydel power generation amid sever winters and low availability of gas for power plants triggered the demand for Furnace Oil (FO), which posted a healthy 5 per cent YoY (21 per cent MoM) growth to 0.7 million tons in Dec 2012.

Data reveals that for 1HFY13 however, oil consumption recorded a modest 3 per cent YoY drop to 9.6 million compared to 9.8 million tons same period last year. Though industry posted a healthy 14 per cent YoY growth in MS volumes to 1.6 million tons, it was not sufficient enough to absorb the fall of 4 per cent and 3 per cent in FO and HSD volumes (contributing 79 per cent to the basket), respectively, dragging overall oil consumption into the negative zone.

Lower gas availability coupled with ban on the installation of CNG kits in new vehicles has so far led to strong substitution effect for petrol, reflected from a massive 14 per cent YoY jump in MS sales to 1.6 million tons. Experts believe this demand momentum to gather pace in 2HFY13 as continued substitution effect is expected to take MS demand up 18 per cent YoY in FY13 to 3.2 million tons.

Amid lower gas availability and declining hydel power generation, FO demand posted a massive 21 per cent MoM growth in Dec 2012. This improvement came mainly from a massive 43 per cent MoM higher fuel utilisation by the gov’t-owned PEPCO plants.

Experts said that increased use of CNG in public transportation across the country has been taking its toll on the HSD demand as evident from a 3 per cent YoY drop in 1HFY13. However with lower availability of gas, experts are witnessing HSD to gain grounds as reflected in Dec 2012 sales figures, which were up a hefty 14 per cent YoY. They believe HSD demand to firm up going forward, due to lower gas availability and the govt drive to discourage CNG use in high-to-middle end private vehicles (cars).