Captive power generated using diesel has come as a lifeline for industry in Tamil Nadu. Expensive compared to the grid supply, it, nonetheless, has helped many industrial units stay afloat, even if it means maintaining a semblance of operation. For some like the IT industry, diesel power has come to be the mainstay given the 24/7 nature of their work.

The reliance on diesel for power generation, however, is not without its share of problems. Apart from being expensive, by at least Rs.10 per unit, for the user-industry, use of diesel has meant reliability on a product that is subsidised and meant primarily as a transport fuel. In the event of an increase in the price of diesel, the economy of operations of such units gets hit.

The per litre price of diesel in Chennai changed from Rs.40.16 in June 2011 to Rs.43.8. But this comfort for the users was disturbed when the government revised the price and the fuel, with levies, became dearer by as much as Rs.6 a litre. Bulk diesel sales in Tamil Nadu, which fell 5.2 per cent in April-September 2011, started picking up from November. The offtake shot up in January by 13.5 per cent, in February by 25.8 per cent and in March the growth at a whopping 35.1 per cent. Oil industry sources say there is no significant let-up in the demand for diesel.

The diesel growth in the State is well above the nationwide figures and according to sources in the oil industry fuelled by the power situation. In the first half of the current fiscal (April-September), the all India diesel growth was 11.1 per cent (retail sales), 6.9 per cent (bulk/direct sales) and overall 10.3 per cent. In contrast, the growth in Tamil Nadu was 19 per cent in retail, which is sold through petrol bunks, 21.2 per cent in bulk sales, and overall 19.5 per cent. The bulk/direct sales are referred to those supplies made directly by the company to customers having large storage facilities.

In what could well be a telling sign of the power situation in the State, bulk diesel sales in September grew by a whopping 33.5 per cent, while growth in retail sales was 16.7 per cent. The overall diesel sales growth last month was 19.9 per cent. With the offtake by state transport undertakings and railways, the two major bulk consumers, remaining near normal, oil industry officials attributed the growth in demand to use of diesel for power generation.

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