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The consumption of petrol and diesel generally declined during the July-September quarter as rains hinder movement. However, analysts expected consumption to pick up in September as sowing activity gathered pace in the country in the last week of August 2022.
According to the Petroleum Planning and Analysis Cell (PPAC), India cumulatively consumed 19.2 million tonnes (mt) of diesel, or high-speed diesel (HSD), during Q2 FY23. This is the highest since FY12.
Similarly, petrol consumption during July-September this fiscal stood at 8.6 mt, which is also the highest for the period since FY12. Likewise, LPG consumption was also the highest for the same review period at 7.3 mt.
September demand
On a month-on-month (m-o-m) basis, the country’s diesel consumption remained flat at around 6.3 mt in September 2022 compared to August. This is again the lowest in 2022 calendar year as well as for FY23 due to restricted mobility on account of monsoon rains.
Petrol consumption during September was down 6.7 per cent m-o-m to 2.8 mt. Demand for petrol, largely used in the passenger vehicles, since the start of the current fiscal has been in the range of 2.8-3 mt largely.
However, demand for LPG rose 4 per cent on a monthly basis to 2.5 mt, which is the highest in the current calendar year and the financial year.
Under recoveries
State-run oil marketing companies (OMCs), which control almost 90 per cent of the domestic retail market, have not raised prices of petrol and diesel in the last over four months to help tame the high inflation.
This is leading to under recoveries, but company officials are confident that the situation in temporary and crude oil prices will soften by the year-end. Crude prices have already softened and are hovering around $92-95 per barrel (Brent). However, the market volatility is still high due to the deepening geopolitical crisis (Russia-Ukraine war).
Brokerage ICICI Securities in a report earlier this month said the three OMCs — IOCL, BPCL and HPCL— remain trapped in the quagmire of weak marketing losses and there is not enough traction in gross refinery margins.
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This is the first hike in retail prices after the government raised natural gas prices to a record high of $8.57/mBtu for H2 FY23 based on the APM formula.“The Q2 may see the trend worsen, with a $5.6-15.9 per barrel Q-o-Q dip in GRMs which is compensated only partly by improvement in blended retail fuel losses (₹9.8 per litre in Q2 against ₹14.4 a litre in Q1). Overall, OMCs are set to report EBITDA loss of ₹14,700 crore and ₹21,270 crore of net loss for Q2 FY23E,” it added.
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