Power crisis drives diesel demand up 8 % in 2011-12

Power cut-induced surge in demand during the second half of 2011-12 in both retail and bulk consumer segments pushed up diesel sales in the country by eight per cent over the previous fiscal. For the state-owned oil marketing companies, however, there was little to cheer as the growth only added to the mounting under-recoveries. Oil companies put the under-recovery at Rs.14 for every litre sold by them. Statistics sourced from the oil industry show that the three oil marketing companies — IOC, BPCL and HPCL — sold a total of 64.66 million tonnes of diesel in 2011-12 compared to 59.99 million tonnes in 2010-11. A combination of factors were at work behind the diesel growth, sources in the industry said, while listing the power crisis in many States such as Tamil Nadu and the growing consumer preference for diesel cars as significant ones. For instance, bulk diesel sales in Tamil Nadu fell 5.2 per cent in April-September 2011 but picked up from November. Offtake shot up in January by 13.5 per cent, in February by 25.8 per cent and peaked in March at 35.1 per cent. The sharp growth in bulk sales over the last three months is a reflection of the diesel consumed for power generation, by mostly industrial units, as the offtake by the state transport undertakings and railways — the two major bulk consumers — is near constant. The power supply situation started deteriorating in Tamil Nadu since November. All India retail sales, a measure of increased consumption by automobiles, grew by 9.3 per cent (53.18 million tonnes). Keywords: Power crisis, fuel prices