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Regular monthly price hikes and lesser use of diesel for power generation has resulted in low demand for diesel in a decade, said Indian Oil Corporation (IOC) Chairman R S Butola today.
Diesel, which accounts for around 45% of the total petroleum product cosumption, has fallen by around 1%. The product had seen a 6-8% growth since 2003-04.
In volume terms diesel consumption in 2003-04 stood at 37.07 million tons rising to 69.08 million tons in 2012-13.
“This year there has been 0.8-1% de-growth. Small adjustments of 50 paise every month has brought some parity with cost,” said Butola.
Since this January, diesel rates have gone up to Rs 6.62 per litre. Despite this, currently there is a Rs 10 per litre under-realisation on diesel.
Petrol on the other hand is sold at market-linked price. While diesel sales dropped in first seven months of the fiscal year that began in April, petrol consumption has risen by 10% to 9.05 million tons.
Last fiscal, diesel sales had risen 6.68% to 69.08 million tons. “We believe that market forces need to be allowed to have proper inter-play (on demand and consumption),” Butola said.
Overall, fuel demand during April-October was at 90.576 million tons against 90.233 million tons of consumption in the same period last year.
