Sales of transportation fuels plummeted in March amid the country-wide lockdown to contain the outbreak of the coronavirus.
Domestic consumption of petroleum products in FY20 inched up 0.2% year-on-year (Y-o-Y) to 213.7 million tonne (MT). Sales of transportation fuels plummeted in March amid the country-wide lockdown to contain the outbreak of the coronavirus.
According to provisional data by the government’s petroleum planning and analysis cell (PPAC), diesel usage dipped 1.1% to 82.6 MT in FY20, while demand for the aviation turbine fuel (ATF) fell 3.6% to 8 MT in the financial year.
Overall products consumption recorded a steep 17.8% Y-o-Y fall in March, with diesel usage declining 24.2% to 5.7 MT and petrol falling 16.4% to 2.2 MT. ATF demand recorded a fall of 32.4% with stringent global and nation-wide travel restrictions.
Due to travel restrictions, fuel consumers have not gained from the dip in retail petrol and diesel prices, stemming from the steep fall in global crude oil prices. The price of the Indian basket of crude fell 65.1% to $24.43/barrel on April 7 since the January 8 peak it touched in 2020. However, diesel prices in Delhi dropped to Rs 62.29/litre, just 9.1%, in the same period.
In line with the government’s target of increasing the share of gas in the economy, liquefied petroleum gas (LPG) usage was up 5.9% Y-o-Y to 26.4 MT in FY20. Petrol consumption in the fiscal was up 5.9% to 29.9 MT. The requirement of furnace oil (FO) and low-sulphur heavy stock (LSHS) fuel — which are predominantly used in industrial applications — fell 7.6% to 6.1 MT in FY20.
Apart from being the fuel and feed-stock for fertiliser plants and industrial units, FO/LSHS are petroleum products which are extensively used as secondary fuel for thermal power plants. Consumption of bitumen, which is mostly used in road construction, dropped 4.9% Y-o-Y to 6.4 MT.
In the wake of falling prices of crude oil, the Union government has increased special additional excise duty and road and infrastructure cess by a total of Rs 3 per liter for petrol and diesel. It has also used the Finance Bill 2020 to create room for increasing taxes on auto fuels by up to Rs 8/litre. Taking such cue, states are also seen to raise the VAT on petrol and diesel.