Minister pegs under-recoveries on essential petroleum products in fiscal 2011 at around Rs59,000 crore, of which Rs18,000 crore is on LPG.
The sight of a delivery man carrying a gas cylinder into the kitchen could be a thing of the past for people in 200 cities in the next five years.
As per the gas distribution plan envisaged by the government, city consumers will receive piped natural gas (PNG) directly in their kitchen by 2015, Murli Deora, minister of petroleum and natural gas, said.
L N Gupta, joint secretary, ministry of petroleum and natural gas, said, “The domestic (LPG) distributors are up for challenging times and they will now have to concentrate more on penetration in rural markets while keeping their transportation costs low to make margins. Also, they will have to come up with other ideas like bulk LPG marketing and to accept the truth that growth will happen only in rural areas and not in cities anymore.”
“It is estimated that for 2010-11, the government would be incurring total
under-recoveries of around Rs59,000 crore on essential petroleum products out of which Rs18,000 crore is only on LPG,” the minister said.
Thus, with every gas cylinder which is sold, oil marketing companies like Indian Oil Corporation, which sells under the brand name Indane, BPCL and HPCL face a loss of Rs205-210 per cylinder.
Pratap Doshi, president, All India LPG Distributors Federation (AILDF), said, “We expect to reach 11.5 crore customers from the present 5 crore, which is a growth of 75%.”
Though domestic LPG consumption in India is growing at a rate of 8% year-on-year, it is auto LPG which is zooming off with better growth figures.
India continues to be the fourth largest LPG consumer in the world after the US, China and Japan. With 90% of the consumption in domestic sector, India is the third-largest LPG consumer in domestic sector.
Auto LPG is growing in India at a rate of 33%, but Korea and Japan are top consumers of auto LPG.
James Rockall, managing director, World LPG Association said, “In India, LPG sales are more domestic-driven while in the US it is industries that consume LPG most. Also, we produce more LPG than we consume.”
India at present has an indigenous LPG production of 9 mtpa and imports of 3mtpa.
As distributors are headed for tough times, the AILDF recently conducted a study and it will submit the recommendations of the oil marketing industry by end of this month.
Doshi said that the body has requested the government to increase distributors’ commission. He did not divulge the increase proposed by the body.
The projected demand for LPG in India in 2011-12 is 15,132 thousand metric tonne (tmt) and by 2014-15 it is expected to go up to 19,223 tmt. An indigenous production of 10,309 tmt is expected next year, which may rise to 13,625 tmt by 2014-15.
The government expects the import requirement for next year at 4823 tmt and sees the numbers to fall in 2012 to 4525 tmt and jump up at to 5598 tmt by 2014-15.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}