Indian Oil Demand Growth to Exceed That of China

India's consumption will soon put it in second place for the nation with the most demand for oil in the world. (Image: Screenshot / YouTube)
India's consumption will soon put it in second place for the nation with the most demand for oil in the world. (Image: Screenshot / YouTube)

China has been witnessing the second biggest oil demand growth in the world over the past few years, just behind the U.S. But all this is set to change this year as India is set to overtake China, according to the research and consultancy group Wood Mackenzie. In 2018, India’s overall fuel demand grew 4.47 percent to 210 million tons from 201 million tons the previous year.

Oil demand

“India’s demand growth recovered strongly in 2018, overcoming the aftermath of the goods and services tax (GST) and demonetization, and contributing to 14 percent of the global demand growth, or 245,000 barrel per day. We forecast oil demand to grow at the same level in 2019,” WoodMac said in a statement (Economic Times). As a consequence, India will be the “second-largest demand growth center globally in 2019.”

The consultancy estimates the demand for diesel to grow at 6.4 percent in 2019 to 112,000 barrels per day, as compared to just 93,000 barrels per day in 2018. Much of the demand growth is expected to happen as a result of robust vehicle sales, higher travel activity due to the general elections in the month of May, and increasing demand for heavy and medium-duty trucks.

India's Future Mega Projects (2018-2025) - Part 1_ $100 billion Bharatmala project 1-54 screenshot

Much of the demand growth is expected to happen as a result of robust vehicle sales, higher travel activity due to the general elections in the month of May, and increasing demand for heavy and medium-duty trucks. (Image: Screenshot / YouTube)

As per the International Energy Agency (IEA), India is expected to remain a major driver of oil demand growth until 2040. Since about 80 percent of the country’s fuel requirements are met through imports, higher oil consumption will eventually weigh down on the country’s economy. As a result, the Indian government has been pursuing an aggressive renewable energy policy.

Renewable energy

India has set an ambitious target of achieving 175 Gigawatt (GW) renewable energy capacity by the year 2022. And according to Anand Kumar, secretary of the ministry of new and renewable energy, the country is well on its way to achieving the target.

“India is fourth in the world in wind power, and fifth in solar power. We will become the leader in renewable energy by 2022,” he said in a statement (DNA India). Kumar expects the share of renewable energy in total power to rise to 33 percent by 2022 from the current level of 22 percent. The existing renewable energy capacity in the country is estimated to be around 75 GW, with around 40 GW of projects at various stages of implementation.

India’s Renewable Energy Journey 1-58 screenshot

India has set an ambitious target of achieving 175 gigawatts (GW) of renewable energy capacity by the year 2022. (Image: Screenshot / YouTube)

However, concerned by the slow pace of capacity addition in the solar energy sector, the administration has made some changes to the auction and project implementation timelines so as to speed up the entire process. This was done to make the target of 100 GW of solar power capacity addition by 2022 a reality.

“The number of days designated for completion of various steps involved in the tendering and auction process of large-scale solar power projects have been reduced by eight to ten days. Earlier, a project would have to be awarded to project developers within 120 days after issuance of the tender document; this timeline has been reduced to 110 days. Similarly, a power purchase agreement would have had to be signed within 150 days after the issuance of the tender documents; this has been reduced to 140 days,” according to Clean Technica.

Previously, developers had to achieve financial disclosures within a period of 12 months. This has been cut down to just nine months in cases where the projects are located within solar parks. However, no changes have been made for projects outside solar parks.

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