Punjab – guzzler of petroleum products

Demand for petroleum products has gone through the roof in the last three to four years in the country and a number of factors have contributed to the uphill consumption pattern; where fall in international crude oil prices in 2014 has been fueling growth in demand for petroleum products due to lower prices, the product-side has also played a vital role. Unabated automobile sales including cars, tractors, trucks and motorcycles and the ongoing construction and development activity under CPEC umbrella have increased consumption of retail fuels like petrol and diesel.

It doesn’t appear surprising that Punjab, the largest province in terms of population remains the largest consumer of the petroleum product. It leads in the consumption of all fuels; but what is significant is the fact that its share of the key products has also seen a jump in the last 12 years. From around 60 percent in FY05, its share of petrol (motor gasoline) consumption has gone up to 66 percent in FY17, while that of Sindh, the second largest consumer has come down by 10 basis points to 21 percent.

Punjab’s share of high speed diesel (HSD) has also increased from 57 percent to 64 percent in the last 12 years, while all the other provinces have seen their share come down. Furnace oil share however, has remained almost static for all the provinces over the last 12 years. Besides higher population, focus of the federal and provincial governments (both PML-N governments) in their tenure with projects like CPEC and other infrastructure projects is highlighted by the market as a key factor behind Punjab taking away a good chunk of petroleum products’ shares.

Some key consumption trends can be seen here. One, petrol consumption has been on the rise in all provinces, and increase in car and motorcycle sales along with the limited availability of CNG post FY09 have been fuelling this growth. In the recent couple of years, petrol prices too have played their part. Punjab has had a 15 percent CAGR over the last 12 years in petrol consumption, while the data reveals it was 11 percent CAGR in Sindh, 19 percent in KPK and 25 percent in Balochistan. HSD, which is commonly consumed by the agriculture and commercial transport sector, has not seen any exponential growth. However, in the recent four years, one can see that this fuel has taken a step up with increased consumption due to the CPEC related transport and infrastructure activities.