Petroleum sales in the country for March 2021 were seen climbing by 44 percent year-on-year with furnace oil volumes shooting up by more than three times. However, the growth in the sales by the oil marketing companies during March-2021 were primarily driven by the low base effect; March 2020 was the first month of noticeable increase in Covid-19 infection in Pakistan as well as the beginning of restrictions that led to significantly low demand for oil and petroleum products. Compared to last year when the government enforced a lockdown to control the virus spread, the economic activity has been on recovery with fewer restrictions in March 2021.
A better indicator for March is the month-on-month growth in petroleum sales. Overall, the growth in volumes was flattish in March month-on-months (around 2.85% MoM), while furnace oil and motor gasoline reported a rise of 16.7 and 9.5 percent, month-on-month. 9MFY21 oil sales have been up by 15 percent year-on-year with major contributions from furnace oil and HSD with growth of 44 and 18 percent year-on-year; motor gasolines too up by 10 percent year-on-year in 9MFY21.
Besides the economic wheel moving, growth in petroleum demand is coming from lower prices of retail fuels, higher trade-related, industrial as well as agriculture activity, higher auto sector sales, and control on grey product that comes in though smuggling primarily from Iran. Moreover, gas shortage in the country has brought back furnace oil in the mix, which will be key in lifting growth in the coming summer months.
OMC volumes are getting back on track as can be seen from the growth witnessed in 9MFY21 versus continuous decline in volumes from FY18-FY20. While the growth is likely to pick up in the medium term, the third wave of coronavirus in the country and the ensuing lockdown and restriction in Punjab could dent April’s volumes.