Truckers stir, low rains to hit diesel sales

A countrywide truckers' strike has hit India's diesel sales and oil companies could be forced to cut refinery runs and reduce imports if the protest continues, industry officials said on Wednesday.

Diesel sales are set to drop further in June because of expected lower agricultural demand as India's weather office has forecast the June-September monsoon rains will be below normal this year.

Oil companies are worried because diesel accounts for about 40 per cent of oil products sold in India and commercial vehicles use about 35 per cent of the fuel.

"If the strike continues it will certainly affect overall demand. Refineries are already keeping high stocks because of the Iraq war and there is not much space to store," an industry official told Reuters.

Truckers unions said the strike, which began on Monday, will continue until their demands are met.

Oil sector officials said that apart from the fall in diesel sales they were also worried about declining demand for naphtha because of sluggish demand from the fertiliser

and power sectors, its main consumers.

"This can force us to reduce capacity utilisation," an official in a state-run oil company said.

India's April-February oil product sales rose to 82.5 million tonnes from 81.1 million tonnes a year ago while diesel sales rose 0.9 percent to 33.6 million tonnes. Naphtha sales fell to 6.8 million tonnes from 7.4 million tonnes in the same period.

Industry officials said the truckers strike had directly hit demand for diesel at petrol pumps and could hit demand for industrial fuels if factories were forced to shut down because of the strike.

The country's biggest car-maker Maruti Udyog Ltd, a unit of Japan's Suzuki Motor Corp, said it might temporarily shut down production as the stoppage had hit component supplies.

The truckers, who carry the bulk of India's freight, went off the roads on Monday to back demands for stable diesel prices, minimum freight rates, fewer levies and taxes and the repeal of an order to scrap trucks older than 15 years.

India imports 70 per cent of the crude oil requirement for its 17 refineries that can process 2.3 million barrels per day.