Non-subsidised LPG sees 8% price rise; LPG now in 90% households

The price of a non-subsidised cylinder rose 8% from Rs 747 a cylinder in December 2017 to Rs 809.5 in December 2018

As the Centre’s flagship scheme Pradhan Mantri Ujjwala Yojana (PMUY) became universal for all categories of poor last week, a major concern has emerged — whether the poor can afford a liquefied petroleum gas (LPG) cylinder?

However, Indian Oil Corporation (IOC) officials said the net price for subsidised LPG consumers rose only Rs 5.21 a cylinder in the last year, as the remaining increase was absorbed by the Centre in form of subsidy. “There was no increase in the net price of LPG for subsidised customers in the last year, other than about Rs 5 a cylinder on account of the goods and service tax (GST) calculated at the market price,” said Sanjiv Singh, chairman, IOC.

The price of a non-subsidised cylinder rose 8 per cent from Rs 747 a cylinder in December 2017 to Rs 809.5 in December 2018. On the other hand, the price of a subsidised cylinder increased only 1 per cent from Rs 495.69 to Rs 500.9 during the period. This reflects in the government's subsidy outgo, too. The subsidy on cooking gas for the first two-quarters of FY18 was at Rs 139.21 billion, as against Rs 208.8 billion in the year-ago period — up 50 per cent.

“When the PMUY was launched in 2016, the penetration of LPG in India was only 62 per cent as compared to 89.5 per cent now. In addition, there is a price advantage, too, after we introduced a 5-kg cylinder for the PMUY consumers," he added. 

As on Friday, more than 58.5 million beneficiaries have been added under UDAY, of which 27.5 million are IOC consumers. The average refill by a PMUY consumer is three-cylinder per annum, versus seven by a normal consumer. 

The company has provided an interest-free loan of Rs 1,600 each to at least 70 per cent of the beneficiaries, who availed it. 

So far, Singh said the company has given Rs 31.25 billion as loan with no time limit, of which Rs 9.55 billion is repaid. 

"Though PMUY became universal, we expect the overall LPG demand to increase by only 6-8 per cent considering the higher penetration and the increased push for piped natural gas," he said. 

Infrastructure push on cards

With the increase in demand of the scheme, oil marketing companies (OMCs) — IOC, Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL)— have lined up massive infrastructure plans, including setting up of 60 new bottling plants, with private participation, and building of new LPG pipelines. 

For these plants, with a capacity of 30,000 tonnes annually, the total investment will be of Rs 4 billion. Early this week, OMCs also got authorisation for a Rs 100-billion LPG pipeline project from Kandla to Gorakhpur, connecting 21 bottling plants.

"Of the new bottling plants, 21 will be supplying to IOC, 20 to BPCL and 19 to HPCL," he added.