Fuel demand stays muted in June; petrol, diesel see double-digit fall in sales

Muted consumption of petroleum products is discouraging for the Union government, which has sharply increased auto fuel taxes by Rs 10/litre on petrol and Rs 13/litre on diesel in early May.

Consumption of auto fuels in June did not improve much from of the levels recorded in May, with diesel sales of 5.5 million tonne (MT) and petrol demand of 2 MT similar to the volumes used in the preceding month.

On a year-on-year basis, diesel consumption was down 24.7% and petrol sales were lower by 16.7%. The sales had dropped over 60% annually in April. Demand for the aviation turbine fuel (ATF) fell 69% annually to 2,01,000 tonne in the month. ATF sales were, however, 1,00,000 tonne more than May, with the opening of the domestic aviation sector with 33% capacity.

Muted consumption of petroleum products is discouraging for the Union government, which has sharply increased auto fuel taxes by Rs 10/litre on petrol and Rs 13/litre on diesel in early May. To shore of more revenue, a host of states have also increased their value added taxes on auto fuels. State-run oil marketing companies (OMCs) would also welcome higher sales as their fuel marketing margins are improving with diesel prices touching new records every day.

Liquefied petroleum gas was the only product which continued registering growth, rising 16.6% annually in June.
, mainly due to government scheme of free cylinder refills for poor households and higher domestic consumption of LPG cooking gas. Consumption of bitumen, mostly used in road construction, increased 32% annually. Consumption of petroleum products had moderated even before the lockdown due to extended monsoon and weak industrial activity. Domestic sales of petroleum products in FY20 had inched up 0.2% y-o-y to 213.7 MT.