Smuggling crackdown boosts Pakistan's diesel imports

High-speed diesel imports in Pakistan recorded a 33% increase in the six months ended Dec 31, due to the strict vigilance by government agencies to check smuggling and increased activity in the agriculture sector.

During the first six months of the current fiscal year, diesel imports surged to 1.1 million tons compared with 827,769 tons in the same period last year, according to data collected from industrial sources.

The increase in imports was mainly due to higher demand from the agriculture sector as most farmers received loans at low interest rates for cultivation, said an analyst. Higher imports raised the consumption of diesel, which rose by 10% to 3.46 million tons, according to data from the Oil Companies Advisory Council.

The increase in HSD offtake came on account of higher demand driven by a decline in the retail price (down 9% compared with last year) and curtailment of smuggled diesel from Iran, said an analyst from Arif Habib Ltd.

In fiscal year 2023-24, nearly 1.7 million tons of diesel were imported, which was almost 26% down from the 2.3 million tons imported in FY23, mainly due to rampant smuggling from Iranian borders.

Government agencies compiled a comprehensive report on the smuggling of petroleum products, showing that billions of rupees were lost last year due to the pilferage of goods arriving from porous and unchecked borders.

Overall imports in the six months ended Dec 31, rose by 8% to 5.246 million tons, valued at around $2.97 billion, showing a fall of 7% due to softer international oil prices.

Crude oil imports during July to December amounted to 4.988 million tons, compared with 4.294 million tons, showing an increase of 16%, according to government data.

The value of crude oil imports showed a nominal rise of 3% to $2.69 billion, according to government data.

The government and State Bank of Pakistan expect the economy to show some recovery in the current fiscal year, reaching around 3.5% compared with 2.4% a year ago, which would help boost overall sales of petroleum products in the country, an analyst said.