KARACHI: Oil consumption witnessed a year-on-year drop of 11 per cent in December and 19pc in 1HFY23 as demand for diesel, petrol and furnace oil remained depressed amid higher prices and plunging auto sales due to an overall economic slowdown.

Oil sales dipped to 1.34 million tonnes in December 2022 from 1.507m tonnes in the same month last year. This is the lowest monthly sales number since the first Covid-19 lockdown period in February-April 2020.

Month-on-month the sales of furnace oil, diesel and petrol declined by 10pc, 22pc and 8pc in December 2022. While year-on-year sales plunged by 3pc, 15pc and 11pc to 123,000, 522,000 and 622,000 tonnes in December 2021.

Cumulative oil sales in July-December stood at 9m tonnes in which furnace oil, diesel and petrol consumption fell by 24pc, 23pc and 15pc to 1.447m tonnes, 3.363m tonnes and 3.835m tonnes.

Fertiliser consumption jumps in December

Insight Research report attributed the drop in diesel sales to the influx of smuggled Iranian diesel while furnance oil demand was down due to lower utilisation for power generation.

The report said the government is likely to collect Rs231bn in 1HFY23 on account of the Petroleum Development Levy (PDL). The report noted that December 2022 revenue collection fell short by Rs225bn against the target.

At current volumes, even with the maximum possible PDL on petrol and diesel (Rs50/litre), the government is unlikely to achieve its budgeted targets. News reports suggest that IMF has been pushing for more stringent measures to fill the tax shortfall, such as an increase in PDL limits and the imposition of a general sales tax (GST).

Fertiliser sales rise

According to Arif Habib Ltd (AHL), urea and DAP sales during December 2022 surged by 30pc and 37pc to 833,000 and 160,000 tonnes from 599,000 and 117,000 tonnes in December 2021. In 2022, total urea offtake soared by 6pc to 6.616m tonnes from 6.262m tonnes in 2021 while DAP recorded a drop of 36pc to 1.207m tonnes from 1.881m in 2021.

AHL said the closing inventory of urea settled at 64,000 tonnes by the end of December 2022 compared to 313,000 tonnes in November 2022. The inventory of DAP as of December 2022 was 432,000 tonnes.

Published in Dawn, january 4th, 2023