Sept raises temperature of fuel sector

Diesel consumption growth at 4-year high, petrol usage at 2-year high; deficient monsoon prompts higher use of diesel

September will be remembered for three simultaneous records in India’s fuel sector. Diesel consumption growth during the month peaked at a four-year high of 20 per cent and petrol usage grew at a two-year high rate of 25 per cent. However, the consumption of liquefied petroleum gas (LPG) grew only 4.1 per cent, the lowest in two years.

The record growth in diesel consumption, a level not seen since April 2011, was led by lower prices, higher use of agricultural pump sets due to poor monsoon and a jump in the commercial vehicle sales. The low LPG usage was primarily due to implementation of direct benefit transfer in LPG (DBTL), which has cut down pilferage of subsidised cylinders, which account for around 80 per cent of total cooking gas sales.

“The deficient monsoon led to use of diesel by diesel generator sets for irrigation in agriculture. A prospective reduction in price from September 1, 2015 also pushed August sales to September,” the oil ministry’s technical arm Petroleum Planning and Analysis Cell (PPAC) said in its latest study.

Cumulative rainfall in the country during the monsoon season between June and September stood at 760.6 millimetres, 14 per cent below the long period average of 887.5 millimetres. September alone recorded a drop of 24 per cent in rainfall. While the rainfall activity was less than normal in all the four regions, the highest drop of 17 per cent was observed in north-west, followed by 16 per cent in central India.

A rise in the demand for logistics and transportation services pushed the growth of medium and heavy commercial vehicle sales to a record 35 per cent during September. Port traffic and cargo handled at the country’s 12 major ports grew 4.1 per cent in the April-September period driven by 42 per cent growth in finished fertiliser and 18 per cent growth in thermal coal shipments. High diesel usage growth in September was also recorded due to the low base of 0.2 per cent growth in the same month last year.

The consumption of petrol, the other automobile fuel, also set a record by growing at 25 per cent, the highest rate since May 2013 when petrol usage had grown 31 per cent. “The high growth in petrol consumption may be attributed to higher usage of cars and two-wheelers due to eased prices of petrol and consumer preference for petrol-driven vehicles,” said PPAC, adding the onset of festive season, a bad monsoon and the slow progress in rapid transport systems also contributed to high petrol usage.

Thanks to the slump in the global crude oil prices since June last year, the retail selling price of petrol has come down by 15 per cent to Rs 61 a litre now from Rs 72 a litre in April 2014. Similarly, diesel prices have been slashed by oil marketing companies by 20 per cent to Rs 44 a litre during the same period.

The trend in the consumption of cooking gas last month followed an opposed trajectory than the two auto fuels. “LPG consumption growth of 4.1 per cent was registered in September 2015. The rate of growth during this month is the lowest in the past two years,” said PPAC. Subsidised LPG consumption grew by a mere 2.5 per cent last month, while the growth of non-subsidised cylinders touched a high of 40 per cent. The DBTL scheme has curbed the diversion of subsidised cylinders to commercial establishments.

The DBTL scheme, also known as PAHAL, was rolled out across the country in January this year. Under the scheme, cooking gas subsidy is directly transferred into the beneficiary bank accounts leading to plugging of leakages. By March this year, the scheme eliminated 33.4 million fake or duplicate consumers of the total 181.9 million registered LPG users. This means an annual subsidy savings of Rs 14,672 crore based on the quota of 12 cylinders per consumer and the average LPG subsidy of Rs 336 a cylinder for 2014-15.