Petroleum sales – another upbeat month

While May 2021 has been relatively slower than the previous month in terms of economic activity due to long Eid-ul-Fitr holidays and the lockdown to curb the third wave of coronavirus in the country, it has brought a host of positive news on the economic data front. The growth in provisional GDP and the recovery and rise of economic activity is also reflected in the country petroleum sales by the oil marketing sector. The month-on-month increase in sales by the OMCs in May 2021 was still above 1 percent month-on-month despite lesser number of working days during the month and furnace oil and diesel sales declining by 6 and 4 percent month-on-month, respectively.

This was primarily because of growth in motor gasoline or petrol. Total oil sales by the sector on a year-on-year basis grew by over 14 percent. Disaggregation by product shows that the largest contribution in May-21 was made by petrol that grew by 9 percent month-on-month and by 15 percent year-on-year. Even more so, petrol sales in May 2021 were the highest ever in the country’s history. Petrol sales have remained in the same range in recent months due to recovery seen in the economy – particularly the automobile sector sales.

Overall, in 11MFY21, petroleum sales grew by 18 percent year-on-year to over 17.5 million tons. The growth was led particularly by furnace oil and diesel. The growth in furnace oil has emanated from increased use in the power sector, which will continue in the coming months as electricity demand peaks. Diesel sales growth on the other hand shows the revival in the agriculture sector and the curbs on the illegal fuel crossing borders.

While part of the growth in petroleum product sales has to do with low base of FY20 as the country was in lockdown and economic activity was curtailed; the growth seen in FY21 is also attributable to the recovery seen in the economy as seen in the recently projected GDP numbers; rise in industrial activity as depicted by the growth in large scale manufacturing (LSM); growth in cement and auto sectors; and increased activity in the agriculture sector as portrayed by bumper crops in FY21.