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Over the last few years, LPG demand in India has been growing at a rate of about 10-11% per annum. During the period April to November 2004, the industry has registered a growth of 12.6% over the same period last year. Region-wise growth rates for the country are as under:
LPG REGION - WISE SALES – APRIL - NOVEMBER, 2004
(in Thousand Metric Tons)
REGION
TOTAL SALES (April – November 2003)
TOTAL SALES (April – November 2004)
GROWTH % (April – November 2004)
North
1,920
2,106
9.7
East
709
789
11.3
West
1,489
1,684
13.1
South
1,613
1,872
16.0
All India
5,731
6,451
12.6
2. During the current year April to November, 2004, OMCs have enrolled more than 50 lakh new customers and 410 new LPG distributorships were commissioned, as against 78 lakh new customers and 415 new LPG distributorships respectively during the entire last year (2003-04).
3. Domestic LPG connections and cylinder refills are available on demand throughout the country. Domestic LPG is a heavily subsidized product and the current RSP of a cylinder at Delhi is Rs. 281.60 whereas the import parity price based on November international price is Rs. 492/-. Thus the present subsidy element for each domestic LPG cylinder is around Rs. 210.40 per cylinder. This consists of Government subsidy of Rs. 22.58 and the Oil PSUs have been sharing the balance by not passing the full increase in the international prices in the domestic consumer prices.
4. At present, the indigenous production of LPG is not adequate to meet the total demand in the country. To meet the total demand in the country, public sector Oil Marketing Companies have imported 1.344 million MT of LPG during April to November, 2004, as against 1.492 million MT of LPG imports during the entire year 2003-04. Sufficient imports have also been lined up for meeting the total demand in the future months.
5. To ensure supplies to genuine customers, the following measures are also being taken at Area Office / Field Levels by the OMCs:
· action is taken against distributors for any established cases of diversion of cylinders in line with the Marketing Discipline Guidelines,
· request the State authorities for their assistance in curbing misuse of domestic cylinders for commercial purposes,
· press releases are issued periodically against misuse of domestic cylinders for commercial purposes,
· customer contacts are done for customers with high consumption levels to confirm the genuineness of the refill supplies made.
6. Domestic LPG connections and cylinder refills are freely available. There is no shortage. However, the OMCs have started exercising control on the refill sales by the distributors. The sale of LPG registered exceptionally high growth during April to October, 2004 (12.9% against 10-11% in last few years). It was found that large quantities of domestic LPG were being diverted by unscrupulous elements either for non-domestic commercial use or as a substitute fuel in automobiles. The OMCs have, therefore, formulated a supply plan based on the distributors customer strength and per capita consumption in the market. Equitable distribution of LPG cylinders is made over the month in accordance with the plan. This system has been put in place with a view to preventing the misuse and diversion of domestic LPG, which is a heavily subsidized product.
7. After the introduction of the tendering system for the procurement of cylinders in 2001, cylinder procurement suffered a setback in 2002-03 & 2003-04 because of the unprecedented and steep hike in steel prices, since the tenders did not have any escalation/de-escalation clause. The OMCs have now incorporated the price escalation/ de-escalation formula in the tender and the cylinder manufacturers are compensated for the extra cost they incur on account of any rise in steel prices.
8. IOC have already finalized the tender for the procurement of 112 lakh cylinders during November, 2004 and supplies of cylinders have already commenced against this tender. HPCL and BPCL have floated tenders for 32 lakh and 36 lakh cylinders respectively, which are due for opening at the end of December, 2004. While the three OMCs received 71.59 lakh cylinders in the period April-November, 2004, they have already procured 7.29 lakh cylinders in the month of December, 2004 (upto 20th December, 2004).
9. As of 01.12.2004 there was a pending waiting list of 1.59 lakh for the release of new LPG connections by the OMCs with State-wise details as below:
WAITING LIST FOR NEW CONNECTIONS AS ON 1.12.2004
STATE
NUMBER
Karnataka
72,528
Tamil Nadu
59,072
Kerala
27,163
Maharashtra
60
W. Bengal
33
TOTAL
1,58,856
Owing to the improved receipt of new cylinders, the waiting list for new connections has been wiped out in Tamil Nadu, Kerala, Maharashtra and West Bengal, while in Karnataka, 48,000 cylinders have been supplied as on date. The balance waiting list is expected to be liquidated completely by 31.12.2004.
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