Where prevalent gas curtailment advocates for higher oil consumption, notorious circular debt along with higher prices is keeping a check on overall oil sales in the country, industry experts said.

Extrapolating for last few days of March, country’s oil sales stood at 14.1 million tons in 9MFY13, which is 1 per cent down from 14.2 million tons sold in the same period last year. As per statistics, amongst the individual products, sales of furnace oil and diesel declined by 1 per cent and 5 per cent, respectively. On the other hand, petrol sales have shown a growth of 15 per cent, primarily benefiting from gas curtailment to CNG sector.

Though, recent increase in margins of diesel and petrol add positive variance to sector’s profitability, but presence of circular debt along with muted volumetric growth will continue to be a drag on sector’s earnings, observed Nauman Khan, expert from Topline. In a report, he said that increase in electricity tariff holds the key to changing fortune of the sector.

Country’s oil sales are estimated to stand around 1.5 million tons in March, up 11 per cent from previous month but is down 4 per cent against the same month last year, he maintained. FO sales are likely to stand above 700k tons, up 32 per cent MoM and 5 per cent YoY, while HSD sales remained depress.

Product sales would likely stand around 470k tons which is down 4 per cent from February while 20 per cent from last March. Higher prices along with restricted economic activity stands as the major factor behind reduce HSD consumption in the country. Petrol sales will likely stand around 260k tons, down 4 per cent from pervious month, but are up around 8 per cent from March 2012.

Amongst the individual companies, PSO sales are likely to stand around 9.0 million tons in 9MFY13, which is down by 1 per cent from last year sales. FO sales that contribute above 50 per cent company’s sales are down 5 per cent, largely on account of notorious debt. In March, company sales will be around 980k tons which is up 19 per cent from previous month while is down 9 per cent from March 2012.

Shell sales are down 3 per cent largely on the back of reduce HSD sales (down 15 per cent) while APL sales are up 3 per cent. However, APL sales are largely driven by higher FO sales, while its petrol sales are stagnant and HSD sales are down 13 per cent.