Fuel demand growth slows to 12-year low

NEW DELHI: Demand for fuels grew at its slowest pace in 12 years at less than 1% as improved power generation reduced use of diesel-fired gensets and monthly hikes in rates nudged consumers to use the main transport and farming fuel more efficiently.

Oil ministry data for 2013-14 shows demand for petroleum products grew by 0.7% to 158.2 million tonnes, which is the lowest since the 0.4% growth rate in 2001-02 when consumption stood at 100.4 million tonnes.

Diesel, which accounts for close to 45% of the total demand for petroleum products, recorded a 1% drop in demand at 68.3 million tonnes, the first drop since 2001-02 when consumption fell 3.7%.

Diesel demand had risen by 6.7% in 2012-13 to 69.1 million tonnes and posted a record 11.1% growth rate in 2007-08. Since then, growth in demand for the fuel has been hovering around 8%.

But petrol consumption grew 8.8% at 17.1 million tonnes in 2013-14, while cooking gas demand was up 4.7% at 16.3 million tonnes.

Petrol consumption had dropped when it was deregulated in June 2010 but diesel continued to see a rise in consumption as it was heavily subsidized. Petrol is now sold at market rate but diesel's pump price is still Rs 5.49 a litre less than its cost.

Fuel demand grew 6% in 2012-13 to 157.057 million tonnes, according to the oil ministry data.