India to face 2.5 M tonne diesal shortage

India is likely to face a shortage of 2.5 million tonne of diesel during the November-March period, which would have to be met either through imports or from Reliance Industries' only-for-exports refinery.

"The companies have told us that they will have a deficit of 2.5 million tonne from now till March," Ministry of Petroleum and Natural Gas Additional Secretary S Sundareshan said here.

State-run Indian Oil, Bharat Petroleum and Hindustan Petroleum have projected a cumulative diesel requirement of 1.05 million tonne for December to March, comprising 2,40,000 tonne of Euro-III diesel and 8,10,000 tonne of Euro-II grade fuel.

If these quantities are not tied up with Reliance, the oil companies would have to turn to imports in order to meet the demand in the country.

However, diesel from Reliance's Jamnagar refinery can be bought only if government does away with double taxation, he said.

Since Jamnagar has turned into an Export-Oriented Unit, any supplies to domestic tariff area was levied with dual basic customs duty and a double levy of special additional excise duty. These duties are over-and-above the normal excise duty payable by any other refinery in the country.

For diesel these work out to Rs 6 a litre more in duties, which the oil companies say they cannot absorb given the fact that they already are losing over Rs 7 a litre on the sale of the fuel.

"The matter is under examination and we hope a decision will be taken (in time)," Sundareshan said.

- source economictimes.indiatimes.com