Diesel fuel subsidy resulting in India’s “dieselization”

According to the Performance, Planning and Analysis Cell (PPAC) of India’s Ministry of Petroleum and Natural Gas, the low price of subsidized diesel fuel is resulting in the “dieselization” of the country’s economy. The is certainly supported by the significant growth of diesel consumption in the first six months of 2012, while consumption of other fuels such as petrol, oil and Low Sulfur Heavy Stock (LSHS) remained stagnant. Of the country’s 4.9% growth of petroleum consumption for the period, which reached 148 million tons, diesel fuel accounted for more than 67% of the incremental volumes. Consumption in the second quarter grew by 10% compared with the same quarter last year. The country’s petroleum subsidy reached Rs47,811 crore (US$8.9 billion) in the first quarter of 2012; the figure is expected to reach record levels to approximately Rs50,000 crore (US$9.3 billion) per annum unless policy reforms are introduced. (August 5, 2012)