FY16 fuel demand grows at 2-decade high rate of 10.9%

India’s fuel demand jumped 11 per cent in 2015-16, the fastest pace in two decades, as petrol and diesel sales soared on expanding economy and manufacturing activity. Fuel consumption rose 10.9 per cent to 183.5 million tonne in the financial year ended March 31, from 165.5 mt in the previous year, according to latest data released by the Oil Ministry.

Diesel sales soared 7.5 per cent to 74.6 mt. Petrol consumption was up 14.5 per cent to 21.8 mt, 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. “Petrol consumption has been unprecedented and has surpassed our expectations,” said A K Sharma, Director (Finance), Indian Oil Corp (IOC), the nation’s biggest fuel retailer. “Narrowing price difference between petrol and diesel has led to people preferring petrol driven vehicles.” A litre of petrol in Delhi costs Rs 61.87 in Delhi while diesel is priced at Rs 49.31 per lire. The difference previously used to be about Rs 20 per litre.

Also, petrol is taxed more than diesel. Fuel sales jumped 16.5 per cent in March on back of robust petrol and diesel sales and oil companies stocking dealers with supplies to meet year-end targets. Fuel consumption jumped 16.42 per cent to 17.09 mt in March from 14.67 mt a year ago, according to the data. Diesel demand was up 15 per cent at 6.78 mt, while petrol sales soared 21 per cent to 2.04 mt. Sharma said fuel consumption is likely to remain robust in 2016-17 with petrol demand projected to rise by about 11 per cent and diesel by close to 4 per cent.

Also contributing to the rise in fuel sales is expanding economy and manufacturing as also the agriculture sector demand for diesel. Kerosene demand fell to 6.82 mt from in 2015-16 from 7.02 mt in the previous year as government moved to replace use of heavily subsidised kerosene with LPG.

LPG sales were up 8.6 per cent to 19.5 mt. Naphtha consumption was 20.9 per cent higher at 13.4 mt. ATF or jet fuel consumption was up 8.7 per cent to 6.22 mt in 2015-16, indicating robust growth in air traffic.