The circular debt has crossed the Rs500 billion mark; thanks to increasing power sector receivables. And as per media reports, the growth in receivables is staggering as they jumped up by around four percent month on month in only one month, i.e. July 2014. Normally rising circular debt level starts haunting petroleum sales particularly that of furnace oil, when circular debt rises, power generation decreases and the fuel suppliers like PSO, APL and Shell lose sales volumes.
In FY14, furnace oil sales remained volatile to the circular debt. From this point of view, it is interesting and though provoking than even though furnace oil sales volumes in July 2014 were only one percent higher than those July 2013, furnace oil sales by the oil marketing sector and thus its consumption in the same month has been the highest since August 2012. In the first month of FY15, furnace oil sales crossed 946k tons mark the first time in the last two years, the month-on-month increase in July sales volumes was 5.8 percent.
Similarly, it does not seem that a rise in the circular debt levels has had an adverse impact on furnace oil imports in July 2014. High Sulphur Furnace Oil (HSFO) imports also hovered close to the highest furnace oil sales since August 2012: in July, HSFO imports escalated by nine percent year on year.
However, from the cyclical trend perspective, the increase in furnace oil sales and import seems pretty much in line tandem with the demand for power. June to August is the peak summer time, where the demand for electricity is the highest in the country. Keeping this in mind higher sales and thus higher imports of petroleum products, especially furnace oil, does have a perceptional standing.
As for other major petroleum products, motor gasoline and high speed diesel sales have been continuing their previous trends. Motor gasoline is steady due to the ongoing CNG curtailment in the country. High speed diesel volumes —volatile to the harvesting season—have been under duress due to the easy availability of cheaper, smuggled diesel from Iran.

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