The liberalization of our economy has brought all around economic and social development in our country with corresponding growth in associated activities. This has resulted in an exponential rise in the demand for all forms of energy including petroleum products. The steep increase in the consumption of petroleum products from 3.5 MMT in 1950 - 51 to 96.44 MMT in 1999 - 2000 and further projected increase to 110 MMT in 2001 - 2002 and 150 MMT in 2006 - 2007 demands immediate focus on the imperativeness of an unreserved adoption of demand management measures (Gogoi, 2001).

With the increase in the consumption of petroleum products, consequent decline in resources of oil and natural gas and stabilisation of indigenous crude oil production at around 33MMTPA, the gap between oil production and consumption is likely to widen over the years causing increasing outflow of foreign exchange towards meeting petroleum requirement.

The major part of petroleum product requirement in India is the middle distillates constituting Aviation Turbine Fuel (ATF), SKO, High Speed Diesel (HSD), and Light Diesel Oil (LDO). In terms of volume and growth of consumtion, HSD is the single most important product amongst all petroleum products in the country (Annon., 1994a). From the Table 1 that gives the recurring demand of HSD, we can easily visualise the gap between supply and demand of HSD.

Table 1. Demand Projection of HSD (Figures in thousand tonnes per annum)