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Non-domestic LPG growth strengthens

Ajay Modi/New Delhi 09 Sep 12 | 12:50 AM

The efforts of oil companies to curb diversion of domestic Liquefied petroleum gas (LPG) to commercial use are yielding results. Non-domestic LPG is growing at a much sharper rate than domestic LPG, though it has a smaller base.

Over the last five years, non- domestic LPG connections have grown by 163 per cent to 1.71 million, while domestic LPG grew 49 per cent to 140 million, according to government data. According to the All India LPG Distributors Federation, segments like hotel and industrial cooking, industrial use like cutting, melting and welding of metals, food- processing industry, etc are main drivers of non-domestic LPG. Some segments of consumers have emerged recently in areas like poultry and animal husbandry, road construction (melting bitumen, surface construction), aerosol spray and food grade container industries.

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Pratap Doshi, president of the Federation said oil marketing companies (OMCs) and distributors are jointly undertaking focussed exercise of marketing non-domestic LPG everywhere. is resulting in addition of new segments of users. Since most of the diversion used to take place in the hotel industry, efforts have been made to educate the industry to use non-domestic LPG. The hotel and food industry at 60 per cent is the biggest consumer of non-domestic LPG. “It is a non-subsidised product and companies make profit in it unlike the domestic LPG," said Doshi.

However, the surging burden of subsidy has prompted OMCs — IndianOil, Bharat Petroleum and Hindustan Petroleum to launch drives to check black-marketing and diversion of domestic LPG. Over the last couple of years, they have started blocking multiple connections belonging to a single individual and connections of consumers who already have a piped natural gas connection.

In June, the companies launched a transparency portal that allows customers to keep an eye on the number of cylinders sold in their account by the dealer. It empowers companies to get quick data on number of connections a person or a house has and subsidy availed by each consumer.

In total, the three companies have blocked 4.1 million LPG connections belonging to customers having more than one LPG connection. Similarly, around 1 million LPG connections with consumers having piped gas connections were blocked. Under current drive, companies are targeting consumers with multiple connections from same company. An OMC official said the next stage would be to ensure that one consumer does not have connections from three different companies.

A proposal last year to limit the number of subsidised cylinders consumers could get in a year was dropped after opposition from key UPA allies, the DMK and Trinamool Congress. The petroleum ministry had made proposals to cap subsidy to the committee on direct transfer of subsidies headed by Unique Identification Authority Chairman Nandan Nilekani, under which pilots have also been launched. The ministry wanted to bring an income-based cap on cooking gas so that the subsidy benefit was targeted at economically weaker sections. This proposal is being reconsidered now.

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