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India may halt diesel imports, deal with private refiners: Reports

India’s state refiners may halt diesel imports after working out a temporary mechanism to resume buying the fuel from private processors if global diesel prices remain at current levels, two refinery sources said.State refiners stepped up imports in recent months after private refiners refused to continue absorbing sales tax and coastal freight costs, making the domestic fuel more expensive.Indian imports were a factor behind the stronger Asian gasoil crack, which has been holding near $12 a barrel for the fifth straight session on Monday, after almost doubling to $11.74 on 2 June from this year’s low on 6 April.

Under the latest arrangement, private refiners will pay the central sales tax and state-run marketing firms will pay coastal freight costs for interstate cargoes shipped from plants in Gujarat, the sources said.India’s diesel use is rising along with an economy that grew by 7.6% in the financial year to 31 March. In the last fiscal year India’s diesel demand grew 7.5%, its fastest pace in four years.To meet this soaring demand, the three state-owned firms last year bought some 12 million tonnes of diesel from the private oil processors.State-owned Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp sell the bulk of diesel consumed in India.

Diesel is used as a transport fuel but also for power generators and in irrigation systems and heavy equipment, including those for farming.