Diesel, LPG imports swell despite high refining capacity

Diesel imports rise 23.5%, LPG up more than 5-fold in FY17

India is slowly becoming a big importer of liquefied petroleum gas (LPG or cooking gas) and diesel.

In 2016-17, the import of LPG increased by 23.5 per cent, while that of diesel zoomed 463 per cent compared to the previous year, raising eyebrows among industry experts.

In the current financial year (from April 1), the country imported 915,000 tonnes of diesel in the first quarter itself, as against 997,000 tonnes in all of 2016-17 and 177,000 tonnes in 2015-16.

While the rise in LPG import is mainly because of an increase in consumption through pro-poor schemes like the Pradhan Mantri Ujjwala Yojana (PMUY), officials claim the rise in diesel import is mainly due to the implementation of BS-IV emission grade automobile fuels from April 1.

"The rise in import in the year's first quarter is a temporary arrangement in the case of diesel," S Jeyakrishnan, director, marketing, of Hindustan Petroleum Corporation, told Business Standard.

The company feels with 20 mn additional connections through PMUY in 2017-18, LPG import might further increase. From 8.9 million tonnes (mt) of import in 2015-16, it increased to 11 mt in 2016-17, with consumption rising 10 per cent to 21.55 mt.

Source: Ministry of Petroleum

The argument that complying with BS-IV is the reason for higher diesel import comes at a time when all refineries in the country are reportedly complying with BS-IV norms. "In addition, a huge refinery got commissioned in Paradeep during the time period to meet additional domestic requirements for BS-IV. Hence. it is strange that diesel imports are increasing. Interestingly, the import of petrol declined from one mt in 2015-16 to only 476,000 tonnes in 2016-17," said an industry expert.

In 2015-16, the diesel import bill was Rs 605 crore. It rose threefold to Rs 2,924 crore in 2016-17. The LPG import bill went up from Rs 25,778 crore in 2015-16 to Rs 31,914 crore in 2016-17.

B S Canth, director (marketing) of Indian Oil Corporation, said: "The rise in diesel import was temporary. It has normalised in the second quarter."

The Ministry of Petroleum has approached the finance ministry to add another 30 million customers to PMUY from the current target of 50 mn. For this, it could get additional budgetary support of Rs 4,800 crore. The government has added 69.5 mn connections in the past three years, taking the total past 220 mn. It is believed that in the next three years, it will reach another 60-80 mn.