Byco Petroleum Pakistan Ltd. gross turnover increased by 17% from the previous year to Rs. 251 billion following an increase in oil prices and Rupee’s devaluation. Pakistan’s economic growth slowed considerably to nine-year lows of 3.3% in the previous fiscal year.
The oil sector witnessed a 22% decline in consumption. The Pak Rupee’s value against the US Dollar fell by more than 30% on a worsening current and trade account deficit. Due to the absence of any foreign exchange hedging mechanism, the energy industry incurred significant foreign currency losses.
Byco Petroleum booked an exchange loss of Rs 4.19 billion. The company, however, tried to minimize its exposure to foreign currency but its efforts were hampered by the restrictions on the oil industry to obtain forward cover. Byco Petroleum managed refinery throughput to reduce foreign exchange losses while meeting the minimum volume commitments with its customers which pushed refinery utilization lower.
Due to the government’s policy of fixing petroleum products prices for a month using the exchange rate of the previous month, the devaluation also hurt Byco Petroleum’s refining margins. The volatility in international commodity prices in which Motor Gasoline traded below crude oil further squeezed the refining margins.