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Growth in the petroleum industry – indicated by growth in volumetric sales - by the oil marketing companies turned positive again in FY21 after remaining in the negative territory for over two years. FY20 was the weakest year in terms of year-on-year growth with furnace oil witnessing the largest decline among key fuels; high speed diesel also remained in the negative zone in terms of volumetric growth, while motor spirit also touched bottom with flat growth. However, FY21 has seen a sharp revival of volumes, which is primarily due to the return of demand after it was crushed in FY20 by the global COVID-19 pandemic. Nonetheless, that does not solely describe the growth momentum in petroleum sales by the oil marketing companies – especially for furnace oil that has made its grand entrance back into the sales mix due to rising demand from the power sector and debilitating willingness to continue the curb plan as gas as well as RLNG supply shrink.

Punjab being the largest province in terms of population remains the largest consumer of the petroleum products. Province wise data from OCAC shows that Punjab Province accounted for 61 percent of the total consumption of petroleum products in 11MFY21 that include furnace oil, high speed diesel, motor spirit, JP-1, Kerosene, etc. with an average of 60 percent share over the last 10 years.

Product wise shares of the provinces have largely remained stable for the retail fuels, while Sindh has seen a jump in furnace oil consumption significantly – a jump from around 20 percent share in FY16 to over 50 percent in FY20. Province that has seen its consumption of FO decline drastically has been Balochistan moving from a share of over 20 percent in FY16 to less than two percent in FY20 and less than one percent in 11MFY21.

Where China Pakistan Economic Corridor played a key role in raising petroleum demand, COVID-19, oil prices and massive currency depreciation put brakes in the last couple of years. However, signs of reviving petroleum demand in the country are much clear with industrial, agricultural and transport activity back with much gusto after tougher economic times.

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