India's fuel demand, except ATF, has returned to pre-COVID levels and a reflating economy will help consumption grow in near future, head of the nation's top oil firm said on Tuesday.
Fuel sales had fallen by a record 45.8 per cent in April last year when a nationwide lockdown was imposed to check the spread of coronavirus infections. Demand started to recover with the easing of lockdown restrictions, with petrol returning to normal growth first and now diesel too is back at pre-COVID levels.
"Expect for ATF, we have touched normal demand," Indian Oil Corporation (IOC) Chairman Shrikant Madhav Vaidya said. "We are back on track." While petrol sales had reached pre-COVID levels a few months back, diesel was up 7.4 per cent year-on-year in the first half of March.
LPG sales showed growth even during the lockdown.
With airlines not operating all flights, ATF sales remain below normal.
"ATF may take a quarters time to return to normal, maybe 3-4 months," he said.
IOC, he said, is bullish about fuel demand recovery as the economy grows.
"Let's hope for the best with the vaccine rollout," he said.
Diesel sales in the first half of March rose to 2.84 million tonnes while petrol demand was up 5.3 per cent to 1.05 million tonnes.
This is the first annual rise in petrol sales since October. ATF sales, which fell by more than 80 per cent in the aftermath of the lockdown, was down 36.5 per cent in the first half of March.
India's economy returned to positive growth territory in the fourth quarter of 2020 as its real GDP expanded by 0.4 per cent year-on-year after two quarters of contraction. This was after provincial and localised lockdowns were lifted amid a fall in the daily number of new COVID-19 cases.
Crude oil suppliers group OPEC's monthly oil report last week forecast a 13.6 per cent jump in India's oil demand in 2021 to 4.99 million barrels per day.
India's oil demand had fallen 10.54 per cent in 2020 to 4.40 million bpd from 4.91 million bpd in 2019.
"The encouraging macroeconomic indicators, together with significant decreases in COVID-19 cases across the country, provided a solid foundation for the 2021 oil demand outlook in India," the report said.
The recent positive developments in industrial activities will result in industrial fuels being the backbone for oil demand growth in 2021, with a healthy rebound for transportation fuels providing further support, it said adding the aviation sector will remain under pressure throughout 2021 and will also be a major source of uncertainty.
"Despite some improvements month-on-month, domestic flight operations remained more than 10 per cent lower than the levels recorded during the same period in 2020," the OPEC report said.
In 2020, India's GDP contracted by 7 per cent, but it is forecast to grow by 9 per cent in 2021.
"Following the 0.4 per cent growth registered in 4Q20, India's was one of the few major economies to post growth in the quarter as lockdowns eased, and this rebound is expected to continue as consumption manufacturing activity rise," the OPEC report said.