NEW DELHI, Dec 23: The petroleum ministry has cut its forecast for oil product demand in 1997-98 (April-March) to 82.57 million tonne from a start-of-year forecast of 86.25 million, a ministry official said on Tuesday.

"Based on the consumption trends available for the first half (of 1997-98), petroleum product demand is now estimated to grow by 6.9 per cent instead of 11.7 per cent estimated at the beginning of the year," the official, who declined to be identified, told Reuters.

India consumed 77.22 million tonne of petroleum products during 1996-97.

The lower demand forecast is due to a slowdown in economic activity in the first six months of 1997/98, the official said.

"The demand (for petroleum products) is growing less. Industrial activity has not come up to the expectation. The transport sector, the largest consumer of diesel, is subdued," he said.

In April 1997, the ministry had estimated that demand would grow by 11.7 per cent to 86.25 million tonne. This assumed seven per cent growth in the economy and increased demand for naphtha from power, fertiliser and petrochemical plants.

But India consumed 39.09 million tonne of oil products between April and the end of September, registering demand growth of 6.6 per cent during the six-month period.

The largest declines in consumption were in industrial fuels such as naphtha, fuel oil, low sulphur heavy stock and diesel, the official said.

Naphtha demand grew by 22.7 per cent to 2.51 million tonne during April-September 1997 instead of by 53.8 per cent, as envisaged at the start of the year.

Growth in demand for fuel oil and low sulphur heavy stock, a secondary fuel for thermal power plants and fuel/feedstock for fertiliser units, increased 4.6 percent to 5.38 million tonne in the six month period.

"The ministry had estimated its demand to grow by 6.3 per cent," the official said.

Consumption of diesel -- a fuel for transport (road and railways) and agriculture (tractors and water pumps) and captive power generation -- in April-September 1997 was 17.99 million tonne, a growth rate of 9.2 per cent against a projected 10.8 per cent, he said.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.