Kolkata: India’s consumption of fuels arising out of petroleum products recorded a significant decline in May, PPAC (Petroleum Planning and Analysis Cell)
data show. The country’s total fuel consumption fell 6.5% year-on-year to 19.93 million tonnes in May amid the backdrop of frequent price rise and the continuing supply constraints imposed by the US-Iran war that began on February 28. Consumption of LPG and naphtha, in particular, saw a significant decline while demand for petrol and diesel witnessed a small growth. In May, the government approved found rounds of hikes in retail prices of petrol and diesel that worked out to a cumulative 7.5% rise to provide some relief to the oil marketing companies such as IOC, HPCL and BPCL from the big under-recoveries they were making due to rises in the crude prices.
LPG demand drops sharply
The PPAC data showed that LPG consumption nosedived 20.5% to 2.13 million tons in May. This recorded the biggest fall among all major fuels. Analysts said it was due to supply pressures and rising prices.
Naphtha demand also witnessed a sharp decline and consumption fell 29.5% in May. Naphtha is used in the manufacturing of gas-based products. Naphtha supplies are being diverted to increase LPG production, reports have stated. This has had a direct impact on industrial demand and consumption figures.
Demand for petrol and diesel
Despite the price rise, demand for petrol and diesel increased in the economy. However, the growth rate was much lower than normal. In May, petrol sales increased by 3.3% and diesel sales by only 1.5%. Rising prices and transportation costs continued to pressure consumption. Higher prices at private petrol pumps also impacted consumer demand. India remains the fastest growing major economy and any fast growing economy shows a growing appetite for energy such as petrol and diesel.
No increase in jet fuel
Sales of aviation turbine fuel or ATF remained almost flat in May with consumption remaining at 783,000 tons. Many airlines limited their flight operations due to rising operating costs, impacting demand for aviation fuel.
On May 10, Prime Minister Narendra Modiurged the people to voluntarily cut down on petrol and diesel consumption (among other things) and he repeated the appeal the next day. The rationale was to prevent the continuous fall of the rupee against the US dollar which was triggering a negative impact in the broader economy.
