The 10MFY19 petroleum sales story is nothing to write home about as evident from the continued focus on RLNG and coal instead of furnace oil in the power sector. Similarly decreased economic activity, higher incidence of smuggling of products like diesel and increased petroleum prices – all have been seen to dampen petroleum products sales by the oil marketing companies for some time now.
On a monthly basis, the year-on-year story is also the same. In April 2019, furnace oil and HSD volumes sold continued to decline, while the petrol volumes increased by around 4 percent, year-on-year. However, April 2019 witnessed an increase in overall volumes by 14 percent on a month-on-month basis after remaining either flat or negative in the past couple of months. The highest increase on month-on-month basis was seen in furnace oil (48 percent), while HSD ad petrol increased by around 13 and 5 percent, respectively.
The only reason for a month-on-month strong growth in furnace oil that has been planned to gradually be phased out with more efficient and less expensive fuels came from increased demand from the power segment as the summer season reared its head. Moving forward, this monthly trend is likely to continue where FO consumption in the power sector will increase; here, it is important to mention that the government has lifted the ban on furnace oil imports temporarily to feed the power plants in the coming hot months as well as to fulfill the promise of no electricity load shedding during the holy month of Ramazan. The OMC import volume data has not been updated on OCAC website for the month of April 2019, but it is likely that it will show imports of the fuel in the coming months.
On the retail side, it is more of a game of competition; MS will thrive in the coming months, while HSD is likely to continue face the smuggling headwinds. The market structure in the petroleum retail segment has become competitive where smaller players have pinched market share from some large players. According to a research note by Optimus Capital Management, market share of the top 4 listed OMCs (PSO, SHELL, APL and HASCOL) stood at 70.4 percent in terms of total energy products sold during the April 2019 with their market share dropping by 74bps on a month-on-month basis.
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