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The nationwide lockdown in India, which began on the 24th of March by Prime Minister Narendra Modi put a halt to all operations and businesses across the country. The nationwide lockdown was announced to contain the spread of the COVID-19 outbreak.
With the lockdown in place, demand for fuel dropped drastically, as people stayed at home and were not allowed to travel outside. The month of April was the worst for fuel companies, with demand dropping by 61% for petrol, 56.7% for diesel and a massive 91.5% for jet fuel (ATF).
The demand did improve slightly in the following month of May 2020. However, compared to its sales in May 2019, there was still a massive difference in demand. Now, the country has entered the first stage of its ‘Unlock', which allows various businesses to resume; giving a boost to the economy as well.
With the start of the Unlock 1.0, India's largest oil firm — Indian Oil Corporation, has stated that the demand for fuel will return to near normalcy with the resumption of economic activities.
A spokesperson of IOC told PTI,
"The demand for petroleum products dropped by 46 per cent in April 2020. The sales of petrol, diesel and jet fuel (ATF) in April 2020 were down by 61 per cent, 56.7 per cent and 91.5 per cent respectively as compared to April 2019.
It is expected that with the opening up of lockdown and revival of the economy on the strength of the economic package, the sales would soon get revived. Further, the recent increase in international prices of crude oil and petroleum products, as well as rupee appreciation, has to some extent already offset the inventory losses and forex losses."
The oil firm also stated, "The drop in the sale of petroleum products resulted in a significant fall in revenue collections for the company. In order to meet its contractual and statutory obligations, the company had to borrow funds which resulted in a substantial increase in borrowings. However, since then the borrowings have reduced significantly with an increase in sales and lower crude oil prices."
Thoughts About Fuel Sales Reviving In India Amidst Unlock 1.0
The Unlock 1.0 is the first step among many to restart economic activities in the country, after taking a massive hit over the past two months. The second-stage of Unlock later in July, will further open up more activities further boosting demand and bringing it back on track.