Panic buying and hoarding of diesel has hit Karnataka in the wake of massive power shortage following monsoon failure, oil companies and dealers say.

Industries, commercial establishments and even some residential complexes are forced to use the diesel-run generators for uninterrupted power supply as India's IT hub and other parts of the state remain without power for hours together.

"Demand for diesel has gone up by nearly 40 percent in Bangalore alone since July 20. The daily supply to Bangalore has gone up from around 1,800 kilolitres to about 2,500 kilolitres," a senior Indian Oil Corporation official, declining to be identified, told IANS Wednesday.

With the state government indicating Wednesday that there would be no power supply for up to six hours in Bangalore and other major towns and up to 10 hours in rural areas, the demand for diesel would only go up, oil companies and dealers fear.

Many dealers in Bangalore and other parts of Karnataka have begun restricting diesel sale to 10 litres at a time.Since July 20, there have been long queues at several petrol bunks in Bangalore.

"People are stocking up to run the generators as they fear massive disruption in power supply in the coming days," the official said.

The official said people need not go in for panic buying as that only creates artificial shortage. The oil companies have adequate stocks to meet the normal demand and hence there is no fear of short supply, he said.