December 2014 saw sale of major petroleum products, including furnace oil, high speed diesel (HSD) and motor gasoline (Petrol) for 2014, stagnant at around 20 million tons. With only one percent year-on-year overall growth, sales of major petroleum products make up around 90 to 95 percent of the total petroleum sales by the oil marketing companies (OMCs).
Overall, the sales of major petroleum products were marred by four percent decline in HSD volumes in CY14 versus CY13. High speed diesel has been in duress throughout CY14 as well as 1HFY15 due to cheaper Iranian diesel being available all year round. However, motor gasoline kept the volumetric growth in momentum thanks to a nine percent year-on-year increase in CY14.
When looking at the six months sales for fiscal year 2015, motor gasoline was again the growth propeller for petroleum sales; in 1HFY15, petrol consumption and sales volumes were jacked up by 10 percent year-on-year. This was expected as petrol sales volume was seen growing after the price cuts, and the curbs on CNG usage.
Unlike CY14 figures where furnace oil sales were more or less similar to CY13 volumes, the decline in furnace oil sales picked up pace during the first six month of FY15 as power sectors receivables started piling once again. Furnace oil volumes slipped by more than five percent year-on-year in 1HFY15 on account of build-up circular debt. On the other hand high speed diesel remained at similar levels in 1HFY15 as that in 1HFY14.
With international crude oil prices on a decline, oil marketing companies are destined for some inventory losses in the upcoming financial performances. Another highlight of the sector has been the recent move by the government to increase GST on petroleum products from 17 percent to 22 percent, which would likely make a dent on the optimistic volumetric projections in the months to come.