Domestic fuel demand drops 10% as coronavirus spreads
NEW DELHI: Domestic demand for petrol, diesel, jet fuel and shipping fuel have all contracted 10% in the first fortnight of March, the first such decline in several years, as the Coronavirus outbreak severely restricts public movement and slows economic activity.
Sales are dropping at petrol pumps and compressed natural gas (CNG) filling stations across several states in a sign that March would turn out to be the worst month in several years for fuel consumption despite fall in pump prices. Drop in sales volume would hit earnings of refiners and fuel retailers that are already facing deep inventory losses this quarter due to the oil price collapse.
“The petroleum industry is witnessing the impact of Corornavirus on sales of all petroleum products,” Indian Oil Corp said in an emailed response to ET’s query. “The overall demand of liquid fuels has gone down by 10-11% for the first fortnight of March 2020. Due to restriction in movement and travel advisories, the ATF sales have dropped by over 10%. The bunker fuel sales are also down by approx. 10%.” The decline is in comparison to year-ago period and reflects slowing air travel, economic activity and trade.
Between April and Feb this fiscal year, India’s total oil demand expanded 2% while diesel sales remained flat and petrol expanded 8.2%. The CNG sales are also down about 5% in the national capital region where Indraprastha Gas Ltd operates mainly because CNG-driven school buses aren’t refueling as schools are shut, IGL managing director E S Ranganathan said.
“There is some impact on pump sales. People are restricting their travel even within city. Those driving to go to malls or for entertainment are probably the first to drop out,” HPCLNSE -0.88 % chairman M K Surana said. “There is fear of coronavirus and there are advisories that people are trying to digest. We will have to see how the situation evolves.”
Many companies are encouraging employees to work from home, reducing road traffic and demand for fuels. At the same time, many regular users of public transport are shifting to private cars for office commute to avoid crowd, partly offsetting sales decline. Several pump owners are reporting 15-20% decline in sales. All India Petroleum Dealers Association president Ajay Bansal says his pump in New Delhi has witnessed a 15% drop in sales in the past week. Similarly, Kishor Chauhan, manager at Ravi Auto Services at Worli in Mumbai says the sales at his pump has dropped in a week from 10,000 litres of petrol to just 8000 litres. "People are just scared of coronavirus. They are not coming out," he said.
The Economic Times 18-03-2020