NEW DELHI: India’s fuel consumption fell across the board during the first quarter of the fiscal year 2019-20, as a slowing economy took its toll on industrial activity. While petrol and diesel consumption did record an increase, every other petroleum product —from LPG and kerosene to aviation fuel and bitumen — saw demand falling, with total petroleum product consumption contracting by 0.2 per cent year-on-year for the quarter and 1.7 per cent in June alone.
The fall in demand came even as global crude prices declined, with the Indian crude basket going from USD 71 per barrel in April to USD 62.39 in June.
While Petrol and Diesel demand grew 10 per cent and 2.1 per cent respectively, according to data from the Petroleum Planning and Analysis Cell (PPAC), Aviation Turbine Fuel (ATF) (-2.5 per cent), Bitumen (-6.1 per cent), furnace oil (-6.2 per cent), lubricants (-6.5 per cent), kerosene (-13.4 per cent) and LPG (-1.5 per cent), all saw demand contracting during the quarter. “If industrial activity slows down, this gets reflected in petroleum demand incrementally..,” noted Dharmakirti Joshi, chief economist, CRISIL, adding that there might be several different factors impacting specific products.
In the case of Petrol, analysts said demand has been driven primarily by a shift in preference among diesel
vehicle owners towards petrol due to the narrowing price gap between the two. In fact, diesel, the primary fuel driving cargo transport, saw consumption growth halving compared to the first quarter of FY19, when it grew at 3.8 per cent.
The PPAC notes that in the case of diesel, sharp fall in commercial vehicle sales and delayed sowing of crops due to a late monsoon have combined to impact demand. ATF consumption had been affected by the shutdown of Jet Airways and the grounding of Boeing 737 Max aircraft, while bitumen demand fell due to “lower tendering activity and award of fresh infrastructure projects”.