New Delhi, 22 November
The demand growth for petrol and diesel is going to be severely impacted as compressed natural gas (CNG), ethanol blending, and electric vehicles (EVs) get a pushthrough. According to a CRISIL Ratings report, the demand growth for petrol and diesel will likely decline 1.5 per cent annually this decade, compared with the earlier decade’s 4.9 per cent.
“The trend will also be persuaded by policy interventions as India targets net-zero carbon emissions by 2070. As if on cue, oil refiners would be altering their production mix in favour of alternatives, such as petrochemicals, which should also support their profitability,” said the rating agency.
CRISIL said its analysis shows government initiatives to check emissions will have a bearing on the transportation sector on three major counts this decade.
“Through 2024-25 (FY25), the aggressive adoption of CNG and ethanol blending will help slow down growth in demand for petrol. Beyond that year, there will be further flattening as EVs hit the road rapidly,” said CRISIL.
These initiatives will displace a significant portion of diesel and petrol sales in the years to come.
“Diesel consumption will log a compound annual growth rate (CAGR) of around 4per cent between 2021-22 (FY22) and FY25, but will slow to approximately 2.5 per cent between FY25 and 2029-30 (FY30), given the continuous penetration of CNG vehicles. The brakes will slam harder on petrol sales, slowing it from an already low CAGR of around 2 per cent between FY22 and FY25 to a mere 1 per cent CAGR between FY25 and FY30,” said CRISIL.
Commenting on the prospects for oil-refining companies, CRISIL said, “The 4060 million tonne per annum (mtpa) of capacity addition lined up by refiners � over and above approximately 110 mt that will come onstream by FY30 � may need to be trimmed as these may not be needed,” it said.
“Even excluding these 4060 mtpa capacities, we see utilisation of refiners remaining below 100 per cent all through most of this decade for the first time in years,” the report added.
Says refiners may need to trim capacity expansion plans