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India’s power shortages underscore fuel needs

India’s gas and diesel needs accentuate as power shortages affect industries and businesses

India’s power shortages underscore fuel needs

India’s burgeoning energy demand is once again in the spotlight, as the country struggles to offset shortfalls due to this week’s nationwide power cut.

Asia’s third largest oil importer, India was mired by its worst blackout in history for a second consecutive day on Tuesday, leaving millions of people without access to grid power. Mining operations were stranded, as well as hospitals and train transportation systems across the country.

Along with high temperatures and a lack of monsoon rains, blackouts have driven the consumption of diesel, 40 per cent cheaper than gasoline, to peak levels, especially in the northern region, industry officials said.

“Diesel demand is very high, about 25 per cent growth in some states, mainly due to power shortages,” Bharat Petroleum Corp chairman R. K. Singh told Reuters.

New Delhi projects a 5.9 per cent increase in diesel consumption in the current fiscal year. Diesel sales were up 14 per cent in June to 6.08 million tonnes against the same period last year. The country imported a total of approximately 1.4 million bpd of diesel in 2011.

New Delhi is already in talks with Washington to import shale gas to compensate for a decrease in local gas output which has affected local power plants.

In addition, India’s rampant growth in the car sales sector also highlights national fuel demand in the energy-hungry country. During the first half of 2012, India’s passenger car sales were up 9.7 per cent, outshining bigger markets such as Brazil and China.

The US exported a record amount of 656,000 bpd of diesel fuel in 2010, according to data from the US Energy Information Association (EIA). The country averaged 727,000 bpd in diesel exports for the first six months of 2011, a 32 per cent increase in a trend which is expected to continue.

Power was restored on Wednesday. The government shirked responsibility fo the power cut, instead placing the blame on individual states drawing too much power from an already overburdened grid.





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