Pakistan’s electricity generation fuel mix is on the mend with every passing month, and that is showing its impact on the petroleum consumption trends. The share of furnace oil (FO) based power generation was recorded at 9 percent for the second month running – down from an average 25 percent a year ago.
The FO sales in August 2018 stood at, at least a nine year monthly low of merely 0.19 million tons. The 12-month trailing average for FO sales was 0.55 million tons.
Mind you, this has come at the back of a significant 24 percent year-on-year decline in FO off-take in FY18, where the FO based power generation was still close to 20 percent.
The advent of power plants based on LNG, and indigenous fuel, more of which are slated to come online in the next 12 months has ensured Pakistan’s reliance on FO will continue to go down. That said, the shift from FO based power generation has to be a calculated one, ensuring it does not completely put the refineries in a tough spot.
On the other hand, sales of high speed diesel (HSD) also dwindled considerably in August 2018. It increasingly appears that the impact of gradual price increase in HSD is finally showing on the demand side.
HSD prices have increased by almost 50 percent in the last twelve months, and the pressure on sales was seen coming. HSD sales in August 2018 stood at 0.49 million tons – a 53 month low – and down from the 12-month trailing average of 0.73 million tons.
Petrol (MS) sales have remained stable at 0.6 million tons, much in line with the one year trailing average of 0.61 million tons. Mind you, the price increase has also been significant in case of MS, but demand for petrol has been more resilient and organic.
The strong automobile sector growth is also reflective of the MS sales numbers. That said, with more LNG coming in the system rapidly, and much more planned for the future, of which CNG is also in pipelines, the demand may well be checked should MS prices continue being on the higher side.
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