NEW DELHI: Oil minister Murli Deora is to seek answers from heads of state-owned oil marketing companies on Wednesday on reports of diesel shortages and resultant long queues at petrol pumps in Maharashtra, Gujarat, Bihar, Jharkhand and Madhya Pradesh.
Deora's move follows complaints from several Members of Parliament cutting across party lines. The policymakers have written to the minister saying the companies were cutting down on supplies with the aim of reducing their losses.
Diesel is the highest-selling fuel and the companies are losing Rs 23.23 on each litre for selling at government-capped rates.
On their part, executives of oil companies explain that there is no shortage of diesel and they were releasing additional tankers daily. They attributed reports of some pumps running out of stocks to a spur in demand coming from increased use for running generators and small industries switching to diesel from fuel-oil due to skewed pricing of the motor fuel.
In 2007-08, the country consumed 47 million tonnes of diesel. This reflected an 11% increase in demand over the previous year. In 2006-07 , diesel demand recorded a growth of 6-7 %. Against these figures, demand in the first four months of 2008-09 has already risen 20% month-on-month, according to latest industry data. "There is no shortage of diesel.
Demand has increased by 20-22 % despite the slowdown. We had planned our production estimating a 12% demand increase in mind. But growth in demand has far exceeded as huge quantities of diesel are being diverted to non-transport and nonagricultural use as it has become cheaper than other industrial fuels,'' a top executive of one oil marketing firm said.
One of factors pushing diesel demand is shortage of electricity. With huge parts of the country suffering outages for hours on end-sometimes stretching to 24 hours-existing generators are being run for longer hours and more establishments are adding new ones. The increase in the number of malls too has contributed to diesel demand as they all depend on captive generators for power. Simultaneously, small units have started using diesel as fuel because the government's pricing policy has made it cheaper than other industrial fuels