REFILE-ANALYSIS-India power woes, pricing trigger diesel surge

(Corrects day of week in paragraph 5 to Wednesday, not Tuesday)

By Nidhi Verma

NEW DELHI, Aug 13 (Reuters) - Indian diesel demand is surging ahead at its fastest rate in a decade this year with little sign of abating soon as more companies and homeowners use it to generate emergency power supplies.

While India's endemic power shortages have been a fact of life for decades, only recently has the prospering middle class been able to afford diesel generators in order to keep their homes air-conditioned, or have domestic firms been profitable enough to buy units for fall-back electricity supplies.

And India's policy of subsidising diesel and petrol prices to control inflation -- helping keep it cheaper than other types of power fuel, such as fuel oil -- has helped maintain the momentum in diesel consumption, which may grow by 15 percent this year.

As a result, state oil firms are racing to boost diesel imports, joining peers from Chile to China forced to make up for a lack of power plant capacity or to substitute for a shortage of coal or natural gas, both hard to secure at short notice.

"There is a 23-24 percent unforeseen increase in demand because it is being used in power generation," Indian Oil Minister Murli Deora told reporters on Wednesday.

"We have called a meeting of (state) oil companies to discuss shortages in some parts like Maharashtra," he added.

Domestic diesel sales in the April-June quarter of this year, not a heavy diesel-buying season in India, rose by more than 11 percent to around 1.1 million barrels per day (bpd), nearly a third of total oil demand in Asia's No. 3 consumer.