India's diesel demand soars, no fuel price cut - min

A worker fills a car at a petrol pump in Siliguri in this February 16, 2007 file photo. India's diesel demand is growing at an unexpectedly high rate of 23-24 percent, the oil minister said on Wednesday, causing shortages in some regions.

NEW DELHI (Reuters) - India's diesel demand is growing at an unexpectedly high rate of 23-24 percent, the oil minister said on Wednesday, causing shortages in some regions.

In the April-June quarter diesel sales by oil firms rose sharply, registering annual growth of nearly 18 percent, largely due to use of diesel for power generation.

Diesel, sales of which are subsidised, is nearly 10 percent cheaper than fuel oil, which sells at market rates.

"We have called a meeting of (state) oil companies on Tuesday to discuss shortages in some parts like Maharashtra. There is a 23-24 percent unforeseen increase in demand because it is being used in power generation," Murli Deora told reporters.

Deora also said India had no plans to cut fuel prices despite the fall in global crude prices as government-set prices were still much lower than the market.

"Decline in the global oil prices is a welcome development but there is no scope for reduction in domestic prices," he said.

The government would also thoroughly consider the report of a panel, headed by the former cabinet secretary B.K. Chaturvedi, which has suggested higher fuel prices and lower subsidies, the minister added.