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Diesel consumption down in January on economic slowdown

Our Bureau

MUMBAI, Feb. 21

THE fall in diesel consumption continued for the seventh consecutive month in January, pointing to a prolonged slowdown of the economy. Consumption of all other petro products, however, have shown a substantial increase.

Consumption figures of public sector oil companies for January recorded a marginal drop in diesel consumption to 31,30,000 tonnes compared to 31,55,000 tonnes in January 2000.

Consumption growth rates of diesel, which accounts for 40 per cent of petro product sales, fell to 1.7 per cent from 7.1 per cent, in the period April to December 2000.

`` Diesel consumption is a benchmark of economic progress. It is seen that for every one per cent growth in GDP, demand for diesel grows by about 1.1 per cent,'' said an analyst, pointing out that this is the indicator of the economic slow down.

Fall in agricultural demand for oil products such as diesel has accompanied an overall drop in industry demand over last year, coupled with the hike in prices of petro products like diesel, kerosene and LPG led to a demand slowdown, analysts say.

The slowdown of the automobile sector has seen demand for lubes and greases falling to 4.83 lakh tonnes (5.58 lakh tonnes). Also, sales of heavy commercial vehicles took a beating over last few months, leading to a fall in diesel sales.

`` A fall in diesel consumption points at industrial slowdown but this may not be true of consumption patterns all over the country,'' an analyst said. `` Diesel availability in western India is considered higher than that in the North, thanks to the pre sence of private sector refineries such as Reliance Petroleum,'' he said.

Consumption of liquefied petroleum gas (LPG) has increased by 15 per cent to 625,000 tonnes (540,000 tonnes) while motor spirit or petrol has seen a 17 per cent increase to 560,000 tonnes (475,000 tonnes) for January.

`` Most PSUs have been clearing LPG waiting lists and registering more consumers before deregulation. This may have boosted sales,'' according to another analyst.

Furnace oil sales went up to 590,000 tonnes (501,000 tonnes) while figures for low sulphur heavy stock (LSHS) was 435,000 tonnes (355,000 tonnes).

Aviation turbine fuel (ATF) which is scheduled to be deregulated this month saw sales figures going up marginally to 190,000 tonnes (183,000 tonnes). ATF and motor spirit prices cross subsidise kerosene and diesel. But ATF consumption being lower than di esel or petrol, deregulation is not expected to affect product sales.

`` With ATF being deregulated, prices of the fuel may come down by 15 to 20 per cent,'' said an analyst.