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A logo of Indian Oil is picture outside a fuel station in New Delhi (Reuters)
A logo of Indian Oil is picture outside a fuel station in New Delhi (Reuters)

Indian Oil’s petrol sales up by 1% in Sept as personal mobility preference rises

Energy consumption, especially electricity and refinery products, is usually linked to overall demand in the economy

New Delhi: Indian Oil Corporation Ltd (IOC), the country’s largest fuel retailer, on Monday said petrol sales were up by 1% in September as compared to the corresponding period last year, on account of increasing preference for personal mobility, as lockdown restrictions eased.

This assumes importance as the Indian economy has been severely hit by the covid-19 pandemic. Energy consumption, especially electricity and refinery products, is usually linked to overall demand in the economy. India’s lockdown, the world’s largest and strictest, was the focal point of India’s strategy to contain the virus that originated in Wuhan, China.

“For the first fortnight of September 2020, Indian Oil’s diesel sales rose 22% month-on-month, but was down 9% year-on-year whereas petrol sales is up 9% month-on-month and registered growth of 1% vis-à-vis Sept., 2019," said Indian Oil chairman, S.M. Vaidya while addressing reporters on Monday after the state-run firm’s annual general meeting.

This comes in the backdrop of India’s largest refiner’s clocking an average refinery run of 70% during April—August period. This capacity utilization had increased to around 93% in the first week of July, but later come down to 75% as many state governments reimposed lockdowns. This has now marginally improved during the first fortnight of September.

Mint reported on 25 August about anonymized location data collected by Google from millions of cellphones suggesting that Indians are still wary of going out. India began gradually unlocking its economy in phases on 8 June, allowing more economic activities as part of a plan to revive growth. Mobility was severely restricted after the country imposed the world’s strictest lockdown from 25 March, bringing the economy to a near standstill.

Vaidya said that while the domestic cooking gas sales were up 10.5% as compared to the last year, the aviation turbine fuel (ATF) sales were down 56.4% as compared to last year.

Indian airlines operated a third of their scheduled domestic flights in August and ferried more passengers than previous months, but continued to witness muted demand compared to pre-covid days. Indian carriers flew 2.83 million passengers in August, down from 11.79 million in the year-ago period. Around 40.12 million passengers were carried by domestic airlines during January-August, against 94.36 million during the corresponding period of the previous year.

“LPG is up 10.5% year-on-year and 14% month-on-month; Jet fuel sales is up 27.8% month-on-month but down 56.4% year-on-year," Vaidya added.

Capacity utilization of IOC, the country’s largest oil refiner, had shrunk to around 35% at the beginning of the lockdown, due to India’s petroleum product demand nosediving on account of the restrictions to prevent the spread of coronavirus.

“I strongly believe that India’s energy demand is poised for robust growth in the long-term. And that disruptions like Covid-19 will only change the form in which the energy demand manifests itself," Vaidya said.

The gross refining margin— the difference between the cost of processing crude and the revenue earned from the sale of finished products—that was (-) 1.78 per barrel for the quarter ended 30 June 2020 has considerably improved. The core GRM for August’20 was $10.9 per barrel, Vaidya said on Monday.

The cost of the Indian basket of crude, which comprises Oman, Dubai and Brent crude, averaged $56.43 and $69.88 per barrel in FY18 and FY19, respectively. It was $19.90 in April, $30.60 in May, $40.63 in June, $43.35 in July and $44.19 a barrel in August respectively, according to data from the Petroleum Planning and Analysis Cell. The price was $42.88 a barrel on 18 September.

Vaidya had earlier said the company doesn't expect capacity utilization to be back to pre-covid levels in the near future.

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