Govt panel sees 08-09 oil demand up 6.3%
A top government panel expects India's oil demand to rise 6.3 percent in the current fiscal year and suggests higher fuel prices, use of natural gas to replace diesel and solar-powered lanterns to replace kerosene. Prime Minister Manmohan Singh set up the panel headed by former cabinet secretary B K Chaturvedi in June to look into the finances of oil firms. It said subsidies were so high that all poor households in India could be given solar lanterns at two-thirds the annual kerosene subsidy. The panel's report, obtained by Reuters, suggests that petrol prices be raised by 2.50 rupees a litre every month till March 2009 and diesel prices by 75 paise a month till 2010 to end subsidies on the two fuels. It proposed lower excise duties on the two fuels but oil ministry officials said the proposals for higher fuel prices and lower tax were unlikely to be implemented in an election year. One official said there was strong opposition to the report, which has so far not been allowed to be made public. "We have made just one recommendation after seeing the report: It should be posted on the web for wider public opinion," said an oil ministry official, who did not wish to be identified. Chaturvedi, who is also the former petroleum secretary, said low prices were the key reason for soaring auto fuel demand. "One outcome of keeping the retail selling price of (petrol) and diesel lower through administrative restraints on domestic retail selling prices was an increase in consumption at an elevated pace," the report said. It forecast petrol demand in India will grow by 11 percent this fiscal year to 11.46 million tonnes while that of diesel will rise by 7.7 percent to 51.33 million tonnes. It said "a sizeable part" of India's diesel consumption was for power generation in industrial, commercial and residential establishments because of power shortage. To cut petrol and diesel demand, it proposes better public transport system, increased power generation and use of compressed natural gas instead of diesel to the extent natural gas is available. The panel said kerosene, used by the poor for lighting, can be replaced by solar lanterns.
