India’s fuel sales fell in the first half of April as a record rise in prices in a short 16-day period dented demand, according to preliminary industry data on Saturday.
Petrol sales fell almost 10 per cent in the first half of April compared with the same period in the preceding month, while diesel demand slid 15.6 per cent.
Even cooking gas LPG, which had consistently shown growth during the pandemic, saw a 1.7 per cent month-on-month fall in consumption during April 1-15.
State-owned oil firms, on March 22, ended a 137-day hiatus in rate revision and began passing on a $30 per barrel increase in the cost of raw material (crude oil) during that period when five states, including Uttar Pradesh, went to polls.
Petrol and diesel prices rose by Rs 10 per litre between March 22 and April 6 — the highest ever increase during 16 days since fuel prices were deregulated two decades back.
On March 22, cooking gas prices too were hiked by Rs 50 per cylinder to Rs 949.50 — the highest-ever rate for the subsidised fuel.
Jet fuel prices too climbed to the highest-ever Rs 1,13,202.33 per kilolitre, resulting in a 20.5 per cent fall in sales month-on-month.
In the first two weeks of March, dealers and the public topped up their tanks in anticipation of an increase in prices that had been on hold in the run-up to the elections in states like Uttar Pradesh.
While daily price revisions restarted on March 22, the increases were calibrated. The price increases moderated the consumption.
Petrol sales by state-owned fuel retailers, which control roughly 90 per cent of the market, at 1.12 million tonnes during April 1-15 were nearly 12.1 per cent higher than the same period last year and 19.6 per cent higher than the period in 2019, preliminary industry data showed.
However, the consumption was 9.7 per cent lower than the 1.24 million tonnes of sales in the same period in March 2022.
Diesel, the most-used fuel in the country, saw sales jumping 7.4 per cent year-on-year to almost 3 million tonnes.
This was 4.8 per cent higher than sales in March 2019 but 15.6 per cent lower than 3.53 million tonnes of consumption during March 1-15.
Petrol and diesel sales had risen 18 per cent and 23.7 per cent, respectively, in the first half of March, when most of the hoarding on price hike expectations took place.
Diesel sales during March were the most in any month in the last two years and more than the total volume of diesel sold in April 2020 when the country was under a complete lockdown.
Industry sources said while there was panic buying by individual vehicle owners in the first half of March, petrol pump dealers topped up their storage tanks and any mobile browser or tanker truck they had.
The dealers hoped to make a quick buck by buying fuel at a lower rate and selling at revised higher prices. As prices were raised, consumption fell.
Petrol and diesel prices hit the freeze button just as electioneering in five states, including Uttar Pradesh, picked up in early November 2021.
The record 137-day freeze ended on March 22.
Jet fuel (ATF) sales rose 9.8 per cent to 231,400 tonnes from April 1-15 but were 25.9 per cent less than pre-COVID levels of 2019. However, the sales were 1.7 per cent less than 235,400 tonnes sales in the first half of March 2022.
ATF sales are expected to pick up with the complete opening up of air travel last week.
India went in for a complete lockdown, stopping flights, halting rail and road movements and shutting businesses in the last week of March 2020 to contain the spread of coronavirus. The March 2020 period was near normal as COVID restrictions were kicking in.
The government gave unrestrained LPG cylinders in 2020 to help the poor fight the fallout of the stringent lockdown. This helped state oil firms register growth month after month, even as other transport fuels saw severe demand contraction.
But in the first half of April, LPG consumption fell 0.7 per cent year-on-year to 1.02 million tonnes. This was 4 per cent lower than April 2020 and 20.5 per cent lower than the 1.3 million tonnes demand from March 1-15, 2022.
Cooking gas sales moderated after a Rs 50 per cylinder hike on March 22. LPG sales had risen by 17 per cent in the first half of March.
But compared to the first fortnight of April 2019, the data showed that the sales were up 16.5 per cent.