BUSINESS

Fuel demand reaches 80-85% of pre-COVID-19 levels: Pradhan

Tanking up:Fuel consumption in May was 47.4% higher than April, but 23.3% lower than a year earlierK. MURALI_KUMARK_MURALI_KUMAR

Tanking up:Fuel consumption in May was 47.4% higher than April, but 23.3% lower than a year earlierK. MURALI_KUMARK_MURALI_KUMAR  

Recovery seen following the easing of lockdown restrictions in early May

Fuel demand has reached 80-85% of pre-COVID-19 levels in the first half of June, but returning to a 5% growth trajectory may take up to two years, Oil Minister Dharmendra Pradhan and industry leaders said on Tuesday.

Fuel sales in the world’s third biggest oil consuming nation had fallen to the lowest since 2007 as the government imposed a nationwide lockdown to prevent the spread of COVID-19.

The demand, which had fallen by as much as 70%, has since recovered after restrictions were eased beginning early May.

“When compared with June 2019, petroleum product demand during the first fortnight of June rose to 80-85% of pre-COVID-19 levels,” Mr. Pradhan said during a webinar. Fuel consumption at 14.65 million tonnes in May was 47.4% higher than April, but 23.3% lower than a year earlier. Diesel, the most consumed fuel, was down about 29.4% in May, while petrol sales fell 35.3%.

Between June 1 and 15, diesel demand recovered further. At 2.67 million tonnes, it was 15% lower than a year earlier, industry data showed.

Petrol sales at 930,000 tonnes was 18% lower.

ATF, whose sales slumped to almost nil as airlines suspended operations, was 73% lower in the first half of June. LPG sales were up 7% at 960,000 tonnes.

Sanjiv Singh, Chairman of Indian Oil Corp., said at the webinar that the return of growth trajectory in fuel demand would take 2 years. Prior to losing momentum in 2019-20 due to sluggish economic activity, demand had grown at 4-5 %.

Refining capacity

India planned to almost double its oil refining capacity to 450-500 million tonnes in the next 10 years to meet rising domestic fuel demand as well as to cater to the export market, Mr. Pradhan said.

Construction of a new 60 million tonne-a-year west coast refinery, which is crucial to the capacity doubling plan, will start soon.

“Our refining capacity will increase from about 250 million tonnes per annum now to 450-500 million tonnes in next 10 years,” he said.

The refining capacity of 249.9 million tonnes exceeded the fuel demand of 213.7 million tonnes in 2019-20, but the demand is likely to rise to 335 million tonnes by 2030 and 472 million tonnes by 2040.

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