NEW DELHI: The country’s diesel consumption rose a massive 11.9 per cent in 2011-12, leading to an expected 4.9 per cent growth in the sale of petroleum products in the just-ended financial year. That will mark a four-year-high growth, which is significantly above 2.9 per cent in 2010-11. The government’s projection for FY12 was 4.58 per cent.
Riding on a double-digit growth in diesel consumption, growth in the consumption of petroleum products in the last financial year is expected to touch a four-year high of 4.9 per cent. This is significantly higher than the growth of 2.9 per cent in 2010-11 and the government’s projection of 4.58 per cent.
The Petroleum Products Planning and Analysis Cell (PPAC) termed the high diesel growth as “disturbing”, as this fuel constituted about 70 per cent of the overall growth in petroleum products in February. “This trend is likely to continue, with diesel price remaining lower compared to other competing fuels like furnace oil,” said an official of the PPAC, which functions under the petroleum ministry.
The high diesel growth points to ‘dieselisation’ of the Indian economy, said an industry official. From a mere 35.52 per cent share in the petroleum products basket in 2006-07, the share of diesel has grown to over 43 per cent, driven by its high subsidy. While the latest comparable data for other big economies is not available, according to International Energy Agency data for 2009, diesel had a share of 24.73 per cent in the US and 40.29 per cent in China. Globally, its share stood at 32.29 per cent.
Overall, the domestic petroleum products consumption grew a sharp 7.3 per cent in February, riding on diesel, petcoke, liquefied petroleum gas (LPG) and aviation turbine fuel, pushing the 4.5 per cent growth in April-January period to 4.9 per cent for the April-February period. In recent months, diesel consumption has been growing at close to double digits, owing to factors like power shortages and robust commercial vehicle sales. This was also one of the rare years when diesel consumption growth, at 7.6 per cent, outstripped the growth in petrol consumption, which grew close to six per cent, primarily due to the frequent rise in petrol prices during the first nine months of the current financial year. Though petrol prices, too, have not been revised for over four months, these remain much higher, compared to diesel prices.
The rising consumption, however, brings no cheer for oil marketing companies, which are losing on diesel, which accounts for 43 per cent of the consumption of petroleum products. Oil marketing companies (OMCs) have been holding on to the retail prices of diesel, LPG and kerosene since June 2011.
Currently, the three OMCs, Indian Oil, Bharat Petroleum and Hindustan Petroleum, together lose Rs 563 crore a day on the regulated sale of diesel, kerosene and domestic cooking gas. Product-wise, the loss is Rs 14.36 on a litre of diesel, Rs 31.04 on a litre of kerosene and Rs 570 on every domestic cooking gas cylinder. Of the Rs 97,313 crore of losses these companies incurred during April-December period of the previous financial year, 58 per cent was on account of diesel alone.
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