Countrys dependence on imported fuel surges to 58pc

KARACHI - The oil products consumption in the country witnessed a significant surge of 15.32 per cent in the first half of financial year 2010 on year-on-year basis with total volumes at 9.98 million tons.
During the period under review, local refineries contributed only 42 per cent to the total POL consumption against contribution of 52pc last year.
Reduced spreads on POL products and liquidity crunch coupled with alteration in the petroleum pricing mechanism severely dented refineries profitability and in order to rope in their losses, they are forced to operate below their optimal level which is currently at 61pc.
As a result, countrys dependence on the imported fuel has surged by 10ppts to 58pc in 1HFY10, said a market expert Khurram Schehzad.
While the black oil category, which includes Furnace Oil (FO) and Light Diesel Oil (LDO), posted a solid consumption growth of 24pc during 1HFY10 primarily because of massive growth in furnace oil that went up by 24pc while LDO went down 13pc on YoY basis.
The reason for furnace oil growth was increased dependence of power plants, Kapco and other Independent Power Producers, on fuel oil, which increased to 85pc from 85pc, he said.
High Speed Diesel, another consumption driver, also rose 1pc during 1HFY10 due to its increased consumption in the transportation and household generators amid continuous electricity shortages during the period.
However, these two major products, FO and HSD, cumulatively contributed 68pc to the total consumption volume growth during 1HFY10 against 70pc in 4MFY10 and 69pc in 5MFY10 amid rising penetration of the Mogas, as its price differential against alternates like CNG and LPG narrowed.
On the other hand, White oil products (Mogas, HSD, HOBC, JP and Kero) cumulatively grew by only 9pc, while contributing 35pc to the overall consumption volumes during 1HFY10. The major highlight of this category remained Mogas which grew by 35pc YoY.
Moreover, not only the month of Dec-09 revealed 11pc YoY growth in POL volumes, the pace of month-on-month decline in growth was also restricted to 6pc. While black oil category shinned in Dec-09 numbers as well with 12pc YoY and white oil in aggregate grew by 9pc YoY during the month. Furnace oil and HSD contributed 58pc to overall consumption volumes while MS and HSD rose by 13pc and 2.1pc YoY respectively. It is to be noted that the decline in price differentials coupled with reduced smuggling of some white oil products from Iran has been improving Mogas and HSD consumption. On the other hand, prevailing gas shortages and reduced availability of hydel amid on-going winter with limited number of alternates will keep furnace oil demand upbeat.