As per Pakistan Oil Report 2022-23 by OCAC, the petroleum product consumption in FY23 fell by 25 percent - after rising continuously for two years by 10 and 14 percent year-on-year in FY21 and FY22 respectively (see illustration from the report). This decline in petroleum consumption continued in 2024 as the volumes were seen falling by 11 percent year-on-year in 9MFY24 with all three key petroleum products posting a decline in volumes during the period: Furnace oil witnessed a sharp decline of around 52 percent year-on-year, while high-speed diesel and motor spirit declined by 5 percent, year-on-year, each.
Recent reports suggest that the Oil Companies Advisory Council has revealed that smuggled petroleum products are causing a loss of over $35 million to the economy every month – adversely affecting their profitability. The research note by AKD Securities suggests the recent influx of smuggled fuel, particularly through Taftan creates ullage issues for the local refineries.
Smuggling of petroleum products particularly via Iran keeps coming back in the news as there has never been a long-term solution to the menace. It is one of the factors behind the decline in volumetric sales by oil marketing companies.
The oil marketing sector has been falling low in volume over the past year and a half at least. Of late, the fall in oil and petroleum consumption has hit the sales volumes of oil marketing companies amid the economic downturn and political chaos. Besides the weak economic activity, the decline in volumetric sales has been due to falling furnace oil consumption by the power sector and continued infiltration by the Iranian diesel and petrol.
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