Growing panic over diesel supplies

A spurt in domestic demand...

06-07

42.89 million tonnes

07-08

47.64 million tonnes

And diversion to export market...

With RIL being granted 100 percent EoU status in Feb 07

Leads to rising imports...

06-07

0.92 million tonnes

07-08

2.93 million tonnes

And a rising import bill

06-07

$0.6 billion

07-08

$1.6 billion

 The domestic supply of diesel has been constrained on rapidly growing demand. The diversion of supplies from Reliance Industries, which was given export-oriented unit (EoU) status last year, has added to the shortage. Reliance produces 10 million tonnes of diesel from Jamnagar.  Selling diesel in the domestic market would lead to an imposition of import duty and cess under EoU norms. An oil ministry official said no decision has been taken on a proposal to waive these duties.  Meanwhile, the first signs of a shortage of diesel are being seen in the northern states.  "For the last month, petrol pump dealers, particularly of Bharat Petroleum Corporation (BPCL), have been facing supply shortage," said Ajay Bansal, general secretary of the Federation of All India Petroleum Traders (FAIPT).  Bansal said it takes almost two days for BPCL to send diesel supplies to petrol pumps from their depots, which used to take only two hours a month ago. "Some pumps are going dry for almost one whole day," Bansal said.  A top BPCL official confirmed a supply shortage in north India.  Demand has been rising as a result of more vehicles running on diesel (almost 50 to70 per cent of mid-sized passenger cars; it was minuscule last year) and many industries using cheaper diesel as fuel rather than naphtha and fuel oil.  Cash constraints of the oil marketing companies