Business Financials

India’s petroleum products consumption growth strong

India’s petroleum products consumption growth strong

New Delhi, Jan 25 (IANS) The overall petroleum product consumption growth in India from April to December remained strong at 9 per cent despite a slump in diesel as the demand in petcoke emerged stronger, a Jefferies report said on Wednesday.

“Overall product consumption growth in India has remained strong in nine months of FY17 at 9 per cent year-on-year despite slower diesel growth due to strength in many other products like petcoke, gasoline, liquefied petroleum gas (LPG), aviation turbine fuel (ATF) and fuel oil,” the report said.

Petroleum product consumption growth has remained strong though it is down slightly from last year’s high of 10.9 per cent. This is despite diesel volume growth decelerating to 3.7 per cent during April-December, from 7.5 per cent in the corresponding period the previous fiscal, it said.

According to the report, the two things that stood out in April-December period were that while the petcoke consumption in India overtook gasoline in tonnage terms, kerosene use was down sharply due to the government strategy, with positive implications for fuel subsidy.

While kerosene consumption had been declining steadily for many years, LPG consumption growth was at a 12-year high.

“We believe this is part of a conscious move by the government to shift households away from kerosene towards LPG. This also ties in with the higher monthly price hikes in kerosene as compared to LPG and news flow on sharp cuts in kerosene quotas to various states,” the report stated.

“Shift from kerosene to LPG has multiple benefits for the fuel subsidy maths. LPG consumers are better tracked making it much easier to implement Direct Benefit Transfer in LPG than in kerosene. Extent of subsidy in LPG is lower than in kerosene and the latter is more prone to be used as an adulterant than LPG,” it added.

Meanwhile, petcoke has been the strongest growing petroleum product reflecting a trend of shift by cement companies away from coal towards petcoke.

Petcoke is a solid carbon derived from refineries and used as a source of energy, notably in power generation and cement industries.

This is likely to continue for another year as more cement producers shift towards petcoke, it said.