KARACHI, Dec 20: A decline of 11.57 per cent in consumption of furnace oil in the first four months of 2002-2003 has caused a slight fall of 1.3 per cent in the country’s total consumption of petroleum, oil and lubricant (POL) as compared to July-October 2001-2002.

A total of 2.14 million tons of fuel oil was consumed in July- October 2002 as compared to 2.42 million tons in the same period of 2001, oil industry sources said.

The consumption of fuel oil had also declined by four per cent to 1.623 million tons in July-September 2002 from 1.782 million.

“Shifting of cement industry to coal, power plants to gas and increasing refining capacity of the existing local refineries are some of the main reasons of decline in fuel oil consumption,” oil analysts said.

Furnace oil demand has declined as Wapda switches over to hydel power generation system due to increased water supply, he added.

Besides, sugar industry also consumes some quantity of furnace oil. Demand from sugar industry remained thin as a result of delay in cane crushing by sugar mills in Sindh. Furnace oil demand would now pick up in the current and coming months as millers have started crushing.

In 2001, Pakistan’s total consumption of furnace oil was 8.2 million tons out of which 5.2 million tons (worth $800 million) was imported, while the rest produced by the local refineries. Last year cement sector consumed 0.7 million tons followed by KESC’s 1.3 million tons, Wapda’s 1.2 million tons and Hubco 1.7 million tons. Figures of 2002 are not available but analysts said that import is estimated to remain between four to five million tons ($600-700 million) in the outgoing year.

Consumption of diesel in July-October 2002 rose by 6.5 per cent to 2.29 million tons from 2.15 million tons in the same period of 2001. Rising sales of commercial and heavy vehicles in the last few months has played a major role in boosting the diesel demand, analysts said.

Similarly, consumption of light diesel oil (LDO), which is used in agricultural machineries, has also jumped to 88,000 tons from 74,000 tons in July-October 2001.

Consumption of petrol showed a slight rise of 0.5 per cent to 360,000 tons in July-October from 358,000 due to rising sales of cars and bikes. Consumption of petrol is expected to show upward trend in coming months as the demand of cars are rising rapidly. The federal government on Thursday asked the assemblers to boost car production to meet the demand spurt.

Consumption of kerosene rose to 112,000 tons from 110,000 tons.

Pakistan’s industrial consumption of POL had increased by 1.62 per cent in July-September 2002-2003 to four million tons as compared to 3.92 million tons in the same period of 2001-2002.

POL consumption reflects the direction of country’s economic activities. A slight decline of 1.3 per cent in July-October 2002-2003, owing to decline in fuel oil consumption, is not considered as a downward journey of the economy as the government is already trying hard to encourage use of coal and gas in order to cut the import bill of furnace oil.