New Delhi May 22: Essar Oil Ltd, India's newest refiner, has offered to wipe out most of the fuel deficit in the country by supplying the entire output from its Vadinar refinery, where production has been raised to 12.5 million tonnes.

Effective May, thruput at Essar's Vadinar refinery in Gujarat has been raised to 12.5 million tonnes a year from 10.5 million tons earlier, company Managing Director Naresh Nayyar wrote to Petroleum Secretary M S Srinivasan on May 5.

Though India is surplus in refining capacity, it is short in LPG and kerosene production. This year, it may even have to import diesel due to double digit demand growth.

Currently, Essar supplies all of the 0.47 million tonnes of LPG, 0.65 million tonnes of kerosene, 4.44 million tonnes of diesel and most of 1.95 million tonnes of petrol to state-run Indian Oil, Bharat Petroleum and Hindustan Petroleum.

At higher thruput, LPG production would rise to 0.54 million tonnes, petrol to 2.23 million tonnes, kerosene to 0.75 million tonnes and diesel to 5.07 million tonnes.

"We are ready to offer the whole of our production of LPG, petrol, diesel and kerosene to meet the shortfall in the country and replace imports," he wrote.

Essar's Vadinar refinery started operation in November 2006 at 7.5 million tonnes a year capacity. This is slowly ramped up and now the refinery is operating at 12.5 million tonnes capacity.

"We take pleasure in confirming that EOL has been supporting the PSU oil retailers effectively by supplying products in the domestic market, thereby substituting equivalent quantity of products import resulting in substantial savings in production procurement cost and valuable foreign exchange for the country," Nayyar wrote.