New Delhi: India's fuel consumption in March shrank by 18 per cent, the biggest decline in more than a decade, as a nationwide lockdown halted economic activity and travel.
India's petroleum product consumption fell 17.79 per cent to 16.08 million tonnes in March as diesel, petrol and aviation turbine fuel (ATF) demand fell, according to official data released on Thursday.
Diesel, the most consumed fuel in the country, saw demand contract by 24.23 per cent to 5.65 million tonnes. This is the biggest fall in diesel consumption the country has recorded as most trucks went off-road and railways stopped plying trains. Petrol sales dropped 16.37 per cent to 2.15 million tonnes as the 21-day nationwide lockdown enforced to prevent the spread of COVID-19 took most cars and two-wheelers off the road.
Oil companies to report big losses as lockdown shrinks sales
State-owned oil marketing companies (OMCs) including Indian Oil, BPCL, HPCL may see significant erosion in the earnings during the January-March quarter of FY20 even though low crude and product prices jacked up their margins on the sale of petrol and diesel.
According to a research report by ICICI Direct, the unusually high gross refining margins reported by OMCs have already seen a fall in the Q4 period and coupled with inventory losses that the companies would report during the period, would lead to a further drop in GRMs and consequently impact their revenues.
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Companies make inventory losses in a falling market as the cost of the inventory in the form of crude and products is higher that the prevailing prices.
The projection is that BPCL may report a net loss of Rs 556.2 crore in Q4, while Indian Oil may report significantly higher losses at Rs 2376.3 crore. ICICI Direct has projected loss to the tune of Rs 628.4 crore for HPCL in January-March quarter of FY20.
(Inputs from agencies)
