India’s consumption growth lower than projected rate

India’s Petroleum Products Planning and Analysis Cell (PPAC), a branch of the petroleum ministry, said that the consumption of petroleum products in the country is growing at a much slower rate than its conservative projection of 4.58% this year. Consumption grew by 3.61% in the first six months of 2011-2012. The slow growth in India follows the worldwide trend which has forced all the leading international agencies such as OPEC, the International Energy Agency (IEA) and the U.S. Energy Information Administration (EIA) to revise their petroleum demand projections every month this year because of the sluggish economic growth all over the world. On a more positive note, an industry official said that although the 3.61% growth is lower than the projected rate, it is nevertheless marginally better than the 2.9% growth of 2010-2011. The lower- than-projected growth rate is attributed to lower consumption demand for diesel fuel and petrol, which together account for half of petroleum products consumed. Petrol is growing at 4.8% compared with 10.7% in 2010-2011. Diesel fuel, which accounts for 40% of the overall petroleum products’ sold, grew by 5.9% in the first half of this year, compared with last year’s 6.6%. Naphtha and furnace oil are also exhibiting sluggish growth. PPAC says that the monsoon season plus the sharp decline in India’s power deficits are the reasons behind the slow growth in diesel demand. Petrol consumption, on the other hand, has gone down considerably because of the regular price increases, which has gone up by 39% since April. (November 21, 2011)