KARACHI: Domestic consumption of furnace oil (FO) fell to an all-time low in July, the first month of the current financial year, after the government imposed new levies on local sales from the start of the fiscal year.
Monthly sales plunged to just 15,410 metric tonnes, the lowest on record. Analysts and industry officials attributed the slump to higher levies introduced in the FY26 budget, including a petroleum levy of Rs82,077 per metric tonne and a climate support levy of Rs2,665 per metric tonne.
They said the measures were introduced under an International Monetary Fund (IMF) condition to boost revenue. However, the levies have severely dented FO sales in the domestic market, where demand was already low due to reduced use in power generation.
“The low sale of FO led to higher exports in the first month of the fiscal year,” a senior official at a local refinery told The News. He said about 130,000 metric tonnes of FO were exported in July.
Pak-Arab Refinery Limited (Parco) led exports with 53,582 metric tonnes, followed by Cnergyico Pakistan Limited (CPL) with around 52,000 metric tonnes and Pakistan Refinery Limited (PRL) with about 25,000 metric tonnes.
The refinery official said July’s sales figures were significantly lower after the levies were imposed. He questioned the government’s policy, noting that it had first stopped supplying gas to captive power plants, and when they began switching to furnace oil, the government imposed new levies on it.
In the last financial year, Pakistan exported over 1.4 million metric tonnes of FO. In June, refineries exported 73,101 metric tonnes, down from 121,066 metric tonnes in May. The official said July figures showed an uptick in exports, which could rise further as domestic demand continues to fall.
The oil sector has already warned the government that the levies would raise FO prices by more than 80 per cent, making operations unviable for many industries, shipping companies and independent power producers (IPPs).
“This levy, in addition to the climate support levy of Rs2,665 per metric tonne, poses a serious threat to the overall business environment,” industry representatives told the government last month.
