Sunday, April 16, 2017

Domestic LPG consumption set to grow 10% this fiscal



The country’s domestic liquefied petroleum gas (LPG) consumption is expected to grow by nearly 10 per cent in 2017-18, over the last fiscal.
“We estimate the country’s total LPG consumption to be at 23.5 million tonne for fiscal 2018,” a top official in the Ministry of Petroleum and Natural Gas told BusinessLine.
“For the connections released under the Pradhan Mantri Ujjwala Yojana (PMUY), till September last year, at least 85 per cent have approached for a refill of LPG cylinders,” the official said.
There is a gestation period of three months for new connections. The refill percentage is expected to grow as households get used to the cooking fuel, he added.
The high refill percentage reflects the success of the scheme and an increase in the country’s overall LPG consumption.
According to the Petroleum Planning and Analysis Cell, provisional domestic LPG consumption for 2016-17 stood at 21.5 million tonne, up nearly 10 per cent from the previous fiscal’s 19.6 million tonne.
The growth in domestic consumption is largely driven by the government’s push to increase household LPG penetration through the PMUY.
During 2016-17, public sector oil marketing companies (OMCs) released 3.25 crore new LPG connections. Of these, two crore were released under PMUY. The government aims to cover five crore households under PMUY till 2018-19. This target is expected to be met and even revised upward, as the government beat its fiscal 2017 target of 1.5 crore by over 50 lakh new connections.
At present, there are 19.88 crore active consumers, according to an official statement, which works out to an estimated 72.8 per cent national LPG coverage. The government target is nearly 84 per cent.
The spurt in connections will also increase the country’s dependence on LPG imports for meeting domestic requirements. According to an Oil Ministry official, during 2016-17, the country met “nearly 50 per cent” of its LPG requirement through domestic production. This means that LPG imports stood close to 11 million tonne for 2016-17.
For fiscal 2018, the government expects an increase in LPG production by public sector OMCs and by private refiner Reliance Industries Ltd.
The increase would help the government in reducing its exposure to currency exchange risk and transport costs associated with imports.
The bottomline, however, imports will play a key role in sustaining the increased consumption. The official said: “For fiscal 2018, we hope to meet 50 per cent of our LPG consumption from domestic sources.”

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