Diesel sales climb 15% on elections

Diesel sales in the country zoomed by 15 per cent in the first fortnight of April 2004, triggered off largely by the ensuing Lok Sabha elections.

But sources cautioned that the government's decision to ban the import of superior kerosene oil (SKO) by private companies could have curbed adulteration and thus contributed to the growth in diesel sales. Additionally, there is the base year effect as last year the consumption of diesel dropped because of a 15-day strike by truckers in the same period.

According to statistics furnished by oil companies, the impact on the demand for diesel on account of election fever in April is close to 0.5 million tonnes. However the other two reasons "" the truckers' strike and sales rising because of the ban on importing kerosene by parallel marketers (traders) "" has a one-time impact.

"The transportation strike had an impact of 0.35 million tonne and lower kerosene sales by private traders resulted in a spurt in diesel consumption by another 0.5 million tonnes on an annualised basis", an oil company executive pointed out.

Senior executives at oil companies claim that the elections have been the primary reason for the spurt in diesel demand in April.

"Considering past experience, sales of diesel pick up by anywhere between 18 per cent and 20 per cent during the elections compared with normal consumption figures," they said.

India has been reporting sluggish demand for diesel over the past three years. Diesel sales dipped from 392.87 lakh tonnes in 1999-2000 to 379.38 lakh tonnes in 2000-2001 and 365.15 lakh tonnes in 2001-2002. The provisional figures of 2002-2003 show a marginal increase to around 365.34 lakh tonnes.

Overall, diesel sales picked up on an average by 1.5 per cent in the second half of 2003-04.

Senior oil industry executives pointed out, "If we remove the three factors which impacted the growth in diesel consumption, there has been a normal growth of 3.5 per cent in diesel sales."

Analysts who track the oil sector said there has been "nothing outstanding in the last fortnight except increased movement of vehicles for the elections. Besides, there has been a minor increase in diesel consumption owing to the joint military exercises by the Indian navy and air force."

They, however, pointed out that "overall, the diesel consumption growth in 2004-2005 will be in the higher end of the range of 3-5 per cent if the GDP growth is in excess of 7 per cent".