Lahore  - The petrol and diesel sales during the month of April 2016 remained strong, increasing by 12 percent and 6 percent to 0.5 million and 0.7 million tons, respectively.

According to latest data, furnace oil sales remained under pressure as they declined 24 percent YoY to 0.6mn tons in Apr 2016. As a result, total oil sales of the country were down 5 percent YoY to 2mn tons in Apr 2016. In 10MFY16, oil sales registered growth of 4 percent to 18.8mn tons led by MOGAS and HSD sales which are up 25 percent and 4 percent respectively. FO sales were down 6 percent to 7mn tons in the stated period.          

Sales of MOGAS and HSD have remained strong due to sharp fall in petroleum product prices thus increasing consumer purchasing power. MOGAS and HSD prices have both come down by 13 percent YoY in Apr 2016 to Rs64/ltr and Rs73/ltr. FO sales have come under pressure due to availability of LNG to power plants and industrial sector.   

With expanding country wide network, Hascol Petroleum’s (HASCOL) sales showed strong growth of 67 percent YoY to 142k tons with market share improving to 7 percent in Apr 2016 vs. 4 percent in Apr 2015. Sales of Pakistan State Oil (PSO), Pakistan’s largest oil marketing company, came down by 8 percent YoY to 1.1mn tons driven by lower FO sales.

Experts continue liking for the OMC sector due to increasing demand of retail products, improving economic activity and increasing car sales.

OMCs are likely to benefit from increasing sales volume of MOGAS and HSD as margins on these items are fixed in rupee terms in contrast to FO where margins are as a percentage of revenues.

They continue to favor PSO due to 1) subsiding cash flow problems, 2) increased demand of retail products, and 3) upside from LNG sales since PSO is the only OMC importing LNG.