LAHORE - With increased supplies to power sector and growing demand from transportation sector, the new fiscal year started on the positive note for the oil marketing companies (OMCs). During July 2012, the sector sold approximately 2.1 million tons of petroleum products, which is 11 per cent up from same month last year and highest monthly sales in country's history. Amongst the individual products, gasoline (petrol) sales continue to show robust trend by reaching highest monthly sales of over 300,000 tons while furnace oil (FO) and gasoil (diesel or HSD) sales also stood at respectable levels. 

Company wise sales reveal that PSO depicted 27 per cent growth in its sales volume mainly attributed to higher FO that contributes over 50 per cent to its sales while Shell and APL declined by 17 per cent and 5 per cent, respectively. Though the stand alone sales numbers are encouraging, however the sector continues to operate in tight liquidity environment amid the notorious circular debt.

The naked eye analysis reveals exciting months for the OMCs sector given highest historic sales of 2.1 million tons, but it warrants close attention. At one end, the sector petrol sales continue to benefit from gov't conscious effort to curtail gas supplies to transportation sector. Petrol sales reached all-time high level of 305,000 tons in the month, up 22 per cent YoY and 16 per cent MoM. Also, HSD's sales, another cash product, remained robust as the sector sold 718k tons in July, which compares favorable from 15 per cent YoY and 18 per cent MoM. In addition, experts also believe significant decline in product price on the back of lower international oil prices also played its part in driving the sales.

On the other hand, higher FO sales that stood at 962k tons which are up 14 per cent from the same month last year and 40 per cent from proceeding month warrant caution. With energy crisis, ensuing circular debt being managed on ad-hoc basis, experts believe higher FO sales translate into increased built-up of receivables, particularly for PSO that enjoys over 85 per cent market share in this product. 

Amongst the individual company's, PSO posted record sales of 1.5mn tons of petroleum product in July which is up by a significant 27 per cent from July 2011. With major player in the FO business, the higher sales are attributed to increased FO sales though improved MS and HSD sales also played their role. On the other hand, APL sales declined by 5 per cent largely driven by lower export sales particularly that of JP, amongst other products. Shell sales declined by significant 17 per cent.