Country’s fuel demand may rise 7.3% this fiscal

After registering the fastest pace of growth in 15 years, India’s fuel demand is likely to rise by 7.3 per

cent in 2016-17 fiscal, lead by robust expansion in consumption of petrol and diesel.

Fuel consumption, which rose 10.9 per cent in 2015-16 to 183.5 million tonnes, is projected to rise to

190.03 million tonnes, according to demand estimates made by Oil Ministry. Diesel demand, which

soared 7.5 per cent to 74.6 million tonnes last fiscal, is projected to further go up by 7.7 per cent to

78.11 million tonnes.

The consumption of petrol is projected to rise by 12.4 per cent to 24.14 million tonnes. Petrol

consumption was up 14.5 per cent at 21.8 million tonnes in 2015-16, its highest level in two decades as

automobile sales grew at their fastest pace in five years on narrowing price differential between petrol

and diesel.

Indian Oil Corp (IOC) Director (Finance) A K Sharma said the narrowing price difference between petrol

and diesel has led to people preferring petrol driven vehicles. While petrol price was free or made

market driven in June 2010, diesel was linked to market only in November 2014. Subsidy on diesel

meant it costed about Rs 20 less than petrol.

But now, a litre of petrol in Delhi costs Rs 61.13 while diesel is priced at Rs 48.01 per lire. The higher rate

for petrol is a result of more taxes on it than diesel. Naphtha consumption is projected to rise by 5.5 per

cent to 13.6 million tonnes in 2016-17, an indication of greater demand from industry because of

economic activity picking up, the ministry’s demand estimate showed.

ATF or jet fuel sale is projected to rise 3.9 per cent to 6.18 million tonnes. So is cooking gas LPG whose

consumption is projected to rise by 9.3 per cent to 21.16 million tonnes.

Kerosene sale, however, is projected to fall 10 per cent to six million tonnes as government pushes for

use of cleaner LPG in households instead of the heavily subsidised kerosene. Kerosene demand fell to

6.82 million tonnes in 2015-16 from 7.02 million tonnes.

NGS INDIA