August 3, 2003	Sunday	Jumadi-us-Sani 4, 1424

KARACHI, Aug 2: Overall petroleum consumption in Pakistan declined by a mere two per cent in 2002-2003 owing mainly to 6.17 per cent fall in the black oil (fuel oil) consumption which enjoys 40 per cent share out of total oil products consumption.

A total of 16.8 million tons of petroleum products were consumed in the outgoing fiscal year as compared to 17.2 million tons, sources in the oil marketing companies (OMCs) said.

Product-wise break-up shows that consumption of furnace oil (black oil) plunged to 7.280 million tons in 2002-2003 from 7.759 million tons in 2001-2002 as a result of fuel substitution with gas by power generating units.

“Gas availability has increased due to discovery of various gas fields in the country thus attracting more power generation units to use cheaper mode of fuel,” research head, Invest Capital and Securities, Mohammad Sohail said.

He said black oil’s bulk users Wapda and the KESC had already moved towards fuel substitution with gas besides relying on maximum utilization of hydel mode of generation. Independent power producers had also shifted to gas. Even eight to nine cement makers out of 23 units had also switched over to coal instead of fuel oil.

“I think fuel oil’s import bill will further shrink in the current fiscal as gas availability is also projected to be increased by 30 per cent in this fiscal from the current level of 2.7 billion per day,” he said.

Sui Southern Gas Company Limited (SSGCL) has already claimed last week that with supply of gas to the requirements of the KESC and WAPDA, these power utilities are now saving nearly Rs800 million per month, which results in annual saving of Rs10 billion.

The decline of 2.3 per cent in overall petroleum consumption does not sound that economy has not performed well. Demand of white oil products like petrol, diesel and airline fuel gives a good impression that the country’s economic indicators remained positive in the last fiscal due to growth in large scale manufacturing and industrial output of other sectors.

Diesel consumption increased by 6.89 per cent to 7.012 million tons from 6.964 million tons in 2001-2002, thus justifying that agriculture, industrial and export sectors have showed a positive growth, which is evident from the export earnings of over $11 billion. Even the country’s economy had inched up by 5.1 per cent in 2002-2003.

“I think rising prices of diesel six months back have affected the offtake of the commodity to the desired level otherwise its consumption would have gone much higher,” Mohammad Sohail adding that movement of export and import goods followed by increase in sales of bus, truck and light commercial vehicles (LCVs) by 25, 56 and 37 per cent provided a boost to diesel demand.

Increase in overall car sales by 46 per cent in 2002-2003 can be attributed to the one per cent rise in consumption of petrol to 1.091 million tons from 1.081 million tons in 2001-2002. New car owners of higher engine capacity still prefer to ply their vehicles on petrol instead of CNG. CNG is usually popular in 800-1,000cc cars as majority of assemblers are rolling out cars with factory fitted CNG kits.

Consumption of kerosene fell by 16 per cent to 0.313 million tons from 0.372m tons since its prices had witnessed rising trend in 2002-2003. Moreover, gradual increase in availability of gas in rural areas followed by increasing demand of liquefied petroleum gas in Northern Areas are main causes of decline in kerosene consumption in the country.

Airline fuel consumption rose by 22 per cent to 0.715 million tons from 0.584 million tons since many international flights returned to Pakistan.

Consumption of light diesel oil (LDO), another black oil product, suffered a fall of 8.6 per cent 0.221m tons from 0.242m tons.

Analysts said that increase in consumption of white oil products reflects that the general economic conditions relating to large scale manufacturing and industrial sector have been showing positive trends despite tremors of Iraq war and threat of Sars epidemic in major developing economies.

According to Economic Survey 2002-03, the country achieved broad-based economic recovery, macro-economic stability, elimination of external accounts, stellar growth in manufacturing sector, robust recovery in agriculture, low inflation, highly conducive interest rates, building up of foreign exchange reserves, tax collection on track and surplus in current account.