Petrol, diesel sales fall after end of subsidy

KARACHI:

The demand for petrol and diesel dropped 12% and 16% respectively in June 2022 compared to the previous month, snapping a long uptrend in sales of petroleum products in the wake of withdrawal of subsidies and imposition of taxes.

Petrol is mostly used by two, three and four-wheeler vehicles, while diesel is mostly consumed by the industrial and agriculture sectors.

The demand for petrol decreased to 702,000 tons in June compared to 776,000 tons in May. Sales of diesel dropped to 713,000 tons in June compared to 776,000 tons in the previous month, Topline Research reported while citing the Oil Companies Advisory Council (OCAC) data on Friday.

“Significant increase in petroleum product prices resulted in a reduction in their consumption,” Islamabad-based energy expert Ammar Khan said while talking to The Express Tribune.

The consumption of diesel may have partly decreased in the agriculture sector following “a notable delay in the sowing of major summer (Kharif) crops including paddy (rice) and cotton due to unavailability of water in June,” said Sindh Abadgar Board Vice President Syed Mahmood Nawaz Shah.

Besides, the wheat harvesting season came to an end in May. “Farmers use diesel in tractors for land levelling in June ahead of the sowing of paddy and cotton. They also use the fuel heavily during the wheat harvesting season (March-May),” he added.

However, a large section of farmers may have prepared land in June for sowing the crops on hopes of water supply soon. “Paddy can be sown despite a notable delay unlike cotton which cannot be planted if the sowing time has passed,” he said.

The government has increased the petrol price by 65.98% (or Rs98.99) to Rs248.74 per litre in the past one month (May 27 to July 1). It has revised upwards the diesel price by 91.84% (or Rs132.39) to Rs276.54 per litre during the same period.

The increase in prices came following the complete withdrawal of subsidies on sales of petroleum products and imposition of petroleum development levy.