Diesel consumption continues to gallop in the country. In August, the increase was over 10 cent on the back of a worsening power situation.
Though “the [diesel] growth moderated a little in August compared to the previous month, but [it] still was high at 10.4 per cent,” says Petroleum Planning & Analysis Cell attached to the Ministry of Petroleum and Natural Gas.
The state-owned oil marketing companies have been voicing concern, for the last six months, about the steep growth as diesel is a regulated fuel and their under-recoveries rose sharply with such consumption patterns. While their objection was to the usage of the regulated fuel for power generation and luxury passenger vehicles, the user-industries maintain that there was little they could do in the face of the power deficit. For the users, particularly small and medium enterprises, power generated using diesel is expensive. The cost per unit of power works out to Rs.10-15 and for many users creates a big hole in the pocket.
“It is strange that while the major economic activities that should fuel the diesel growth are uninspiring in recent months, but diesel growth is still high. Extraneous factors such as price of diesel in comparison to competing fuels and power deficit and the like are mainly responsible for diesel growth, which makes planning process in terms of estimating demand difficult,” according to PPAC’s industry sales review report for August that was released recently.
The report said that while the monsoon position, which was a cause of worry and contributed to the high consumption, improved in August there was no respite from high power deficit. “The power shortage was higher at 9.2 per cent than previous month (9.1 per cent). Power deficit position has significantly deteriorated in the current year compared to the corresponding months of previous year. Major power deficit states, with the deficit in double digit, during August were Jammu & Kashmir, Uttar Pradesh, Daman & Diu, Andhra Pradesh, Karnataka and Tamil Nadu,” according to the report.
The consumption of sensitive products — kerosene, liquefied petroleum gas and diesel — was 38.8 million tonnes in April-August, a growth of 7.9 per cent. “Analysis of consumption trend shows that it is the sensitive products other than kerosene and minor decontrolled products such as pet coke that are contributing to the bottom line growth. Since prices are market determined for decontrolled products, the growth is flat,” the PPAC report said.
Petrol consumption recorded ‘good growth’, for the third month in a row, at 7.5 per cent in August and slowly inching up (4.3 per cent for Apr-Aug) closer to the projected growth of 5.8 per cent for the current fiscal. The corresponding period in the previous fiscal was a low growth months for petrol, the report added.