Indian Oil Corporation (IOC) is planning to market about 50 per cent of the liquefied petroleum gas (LPG) from its six-lakh tonne import terminal at Haldia to private players, following the deregulation of the petroleum sector.
The remaining product from the terminal, which was set up at a cost of Rs 242 crore in partnership with Petronas, the Malaysian oil major and Reliance Petroleum, would be utilised for self-consumption.
ON Marwaha, director (marketing) of Indian Oil said, "We will be using 50 per cent of LPG from the import terminal at Haldia, while the remaining 3 lakh tonne, would be marketed to the private players, who will come into the market once the deregulation is fully sanctioned. Naturally, they will sell their product in domestic, as well as commercial and industrial sectors."
More From This Section
The move is expected to benefit private players, many of which do not have storage facilities or refineries of their own at present, and hence, have to import LPG. However, most of the private sector players have already put further investments in the country on hold, since they are not eligible for the subsidies on sale of LPG to the huge domestic or residential segment, which comprises over 90 per cent of the total market.
On the other hand, LPG marketed by the state-owned companies -- Indian Oil Corporation, Hindustan Petroleum Corporation, Bharat Petroleum Corporation and IBP -- are subsidised for domestic segment. Most private companies have, therefore, a reasonable presence only in the industrial and commercial segments, which do not enjoy any subsidy.
The private sector, however, sees a huge opportunity in the domestic LPG market, as it is shortly expected to be permitted for use as auto fuel. It is expected that there will be no subsidy on LPG for use as auto fuel.
Indian Oil is currently the market leader in LPG sales, with a 51 per cent share. Total LPG sales in the country stands at about seven million tonne, of which almost 90 per cent sales come from sales to the domestic segment.