IndianOil predicts recovery to pre-Covid levels only by year-end
The chairman of Indian Oil Corporation, the country’s biggest refiner, predicted demand would begin to rebound only by year-end as the coronavirus pandemic hits one of the world’s largest energy markets. Shrikant Madhav Vaidya said new lockdowns in India had knocked capacity utilisation down from 93 per cent in early July to 75 per cent by the end of the month but predicted it would stabilise in the coming months. “There is demand destruction but then the country is recovering,” Mr Vaidya told the Financial Times after reporting a sharp fall in year-on-year net profit in the quarter ended June 30. “By the end of the year, I expect that things will be nearly back to pre-Covid times.” New lockdowns in India are hitting the country’s economic recovery as coronavirus rips through the population of 1.4bn people. India is adding more than 50,000 infections daily, bringing its tally of Covid-19 cases to more than 1.6m, the third-largest in the world, with no sign of the infection rate slowing. IOC reported a 47 per cent drop in net profit to Rs19bn ($253m) in the quarter ended June 30 compared with a year earlier. This followed a sharp loss in the three months ended March 31. he economy was hit by a tough initial lockdown imposed by Prime Minister Narendra Modi while dreams of a V-shaped recovery have been obliterated by a surge in cases and new lockdowns. The country’s crude imports fell 19 per cent year on year to a five-year low in June, according to oil ministry data released on Friday. Mr Vaidya said that once the turmoil had settled, he expected appetite for fossil fuels in India, the world’s third-largest oil importer, to recover more strongly than in other markets. Unlike other refiners, Mr Vaidya said IOC had no plans to cut capital expenditure. “The energy demand for the country is going up, unlike the US or Europe, where it is either stagnant or there is negative growth,” said Mr Vaidya. “No single one form of energy will be able to satisfy it all. The Indian bouquet will [consist] of traditional fossil fuels with an increasing amount of gas.”
IOC plans to invest Rs 855 crore in Maharashtra in FY21
Indian Oil Corporation said that it has plans to invest Rs 855 crore in the state in the period between April 2020 and March 2021 and it hopes that the spending activity will be accelerated in the first three months of the year. It said that work has resumed at several of its facilities since the easing of lockdown restrictions. However, in Maharashtra, the demand is back at only 60 per cent compared to 80 per cent across the country due to several local lockdowns. Much of the new investment, the upstream oil company said will go into setting up new fuel stations and creating new capacities. “New LPG plant coming up at Nagpur will increase bottling capacity by 16 per cent (60 TMT/year against existing 360 TMT/year),” the company said. However, it has been facing difficulties in many places to hit the ground running and has been able to spend only about 10 per cent of its planned expenditure. “Indian Oil has targeted a capital expenditure of Rs 26,143 crore during FY 2021 and in the first quarter achieved an approximate expenditure of Rs 2,674 crore, overcoming various issues faced on-ground due to the Coronavirus pandemic,” the public sector oil company said. All the fuel that rolls out of the IOC plants is Bharat Stage-VI emission grade fuel.
Gas supplies to power plant rise over 13 pc in June
Gas supplies to power plants in the country rose by over 13 per cent to 36.16 million metric standard cubic metre per day (MMSCMD) in June this year from 31.95 MMSCMD in the same month a year ago, showing improvement in the beleaguered segment. However, the Central Electricity Authority (CEA) data showed that total plant load factor (PLF) or capacity utilisation of the gas base power plants in the country rose to just 29.4 per cent in June 2020 from 25 per cent in the same month last year. An expert said the consumption of gas by the power sector has improved mainly due to competitive imported gas prices. Data showed that imported gas supplies to power plants rose to 15.78 MMSCMD in June from 12.26 in the same month last year and from 13.02 MMSCMD in May this year. Power plants got imported gas supplies of 10.41 MMSCMD in April this year, up from 8.9 MMSCMD in the same month a year ago. Another expert said that due to economical gas prices in the international market, there could be further rise in the consumption by power plants in the country, especially during monsoon when coal loading is lesser. The expert was of the view that gas consumption also increased due to lower coal loading in the post lockdown period. The government had imposed lockdown from March 25 to contain the coronavirus spread in the country. Gas supplies to power plants in the country increased by 11.65 per cent to 104.78 MMSCMD in April-June from 93.84 MMSCMD in the same quarter last year. However, data showed that PLF of gas-based power plants in the country rose to just 28.6 per cent in April-June this fiscal from 24.8 per cent in the same quarter last year. In November 2018, a high-level committee had given a host of suggestions to address issues related to the stressed power assets in the country in its report. Majority of the recommendations of the committee were considered and implemented by the central government, except related to gas-based power plants. Earlier, the government had given subsidy to buy expensive imported gas for running power plants. The panel recommended to revive the scheme to provide subsidy to buy imported gas for running power plants in the country in view of reduced domestic production. It had said, “Ministry of Power and Ministry of Petroleum and Natural Gas may jointly frame a scheme for revival of gas-based power plant on the lines of earlier e-bid RLNG (Regasified Liquefied Natural Gas) scheme (supported by Power System Development Fund).
India’s fuel demand loses steam in July: Industry data
India’s refined fuel consumption in July slipped from June, according to preliminary industry data, indicating slower industrial activity as high retail prices, floods and renewed coronavirus lockdowns in parts of the country dented demand. Local fuel sales – a proxy for oil demand – plunged to historic lows in April when India imposed a country-wide lockdown. State-refiners’ diesel sales, which account for two-fifth of overall refined fuel sales in India, fell by 13% to 4.85 million tonnes in July from the previous month, and by about 21% from a year earlier, according to data compiled by Indian Oil Corp (IOC). State companies, IOC, Hindustan Petroleum Corp and Bharat Petroleum, own about 90% of India’s retail fuel outlets. Falling local sales and subdued refining margins have forced refiners to curtail crude processing. IOC, the country’s top refiner, doesn’t see fuel sales recovering to pre-COVID-19 level in the near future. Local fuel demand had gathered pace from May when India, the world’s third-biggest oil importer and consumer, partly eased lockdown to bolster its sagging economy. But a spike in domestic coronavirus infections has led to renewed imposition of lockdowns and addition of containment zones in several states. Also, floods caused by rains have displaced and affected millions of people in some states and hit industrial and construction activity in the country. Petrol sales by state companies fell by 1% to 2.03 million tonnes in July from June, and by about 11.5% from a year earlier, the data showed. State retailers sold 10% more liquefied petroleum gas (LPG) in July from June at about 2.275 million tonnes and posted a growth of 3.5% from a year ago. Jet fuel sales in July rose 4% from June to about 218,000, but fell 65% from a year ago as curbs on air travel continued.