India’s fuel demand expected to rebound in 2021-22 with 10% growth

India’s fuel consumption is likely to rise by nearly 10 per cent in the fiscal year beginning April 1, as a reflating economy drives petrol and diesel demand, according to Oil Ministry’s projections.

Petroleum product consumption in 2021-22 could hit 215.24 million tonnes, compared to the revised estimate of 195.94 million tonnes consumption of the current fiscal year ending March 31, the ministry’s Petroleum Planning and Analysis Cell (PPAC) said.

This will be the fastest pace of fuel product consumption in six years. As the economy rebounds from its worst contraction on record and industrial activity picks up, fuel consumption is projected to rise. The two months plus lockdown imposed to curb the spread of the COVID-19 pandemic had shrunk demand to less than half as most vehicles went off roads, trains stopped plying and airlines halted operations.

The reopening of the economy has brought demand back but diesel – the most consumed fuel in the country – is yet to reach pre-pandemic levels. All public transport has not come back on roads yet, and trains are operating at a lower capacity.

Two successive quarters of shrinking GDP saw fuel consumption drop by 13.5 per cent during April-January period of the current fiscal year. PPAC projected a 13.3 per cent rise in petrol and diesel sales while jet fuel (ATF) consumption is seen rising 74 per cent.

Cooking gas LPG demand is seen expanding by 4.8 per cent to 29 million tonnes. Petrol sales are expected to climb to 31.3 million tonnes in 2021-22 while diesel sales would grow to 83.67 million tonnes. Naphtha sales at 15.25 million tonnes will be an improvement over 14.9 million tonnes consumption in the current fiscal year. Consumption of bitumen, used in road construction, is seen rising to 7.1 million tonnes in the next fiscal year from 6.4 million tonnes.

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