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Archana Chaudhary

Mumbai , Dec. 14

By 2006-2007, India is likely to import more than twice the 1.5 million tonnes (mt) of cooking gas it imports today, industry representatives said.

This estimate is after taking into consideration the oil industry's plans to add 24 mt refining capacities through three new refineries in the Tenth Plan. Capacity addition will help add roughly eight mt liquefied petroleum gas supplies.

Officials of oil PSUs say India's growing reliance on cooking gas or LPG goes beyond merely higher availability of the gas compared to the controlled regime through the 1980s and 1990s. Officials estimate LPG demand to go up to 12 mt in 2006 compared with 9.5 mt this year.

"Freeing LPG imports and setting up of Reliance's Jamnagar refinery drastically improved LPG availability in India in the late 1990s. It has been the only fuel to record double-digit growth consistently year after year," said a senior industry analyst.

According to PSU officials, smaller cities, towns and rural areas - what they call the `B' markets - are leading the demand growth.

Until recently, state oil companies - IOC, HPCL and BPCL - marketed LPG only in towns and cities with a minimum population of 20,000. Having saturated these urban markets, they are now expanding into rural areas where private marketers have historically operated. PSUs have been actively pursuing market expansion and have eliminated long LPG waiting lists consisting of six million customers till as recently as April 2000.

Although Government subsidies have helped, officials believe improved purchasing power has played a major role too. Add to this brew, the shrinking of forest covers and lower availability of firewood.

Subsidised LPG historically has been supplied in 14.2-kg cylinders. Smaller, 5-kg cylinders were introduced several years ago but were withdrawn as a commercial failure. These had to be reintroduced in August 2002.

Recently, oil PSUs also introduced auto LPG in cities out of reach for natural gas supplies . "LPG has been the only fuel growing at around 10 per cent or thereabout. This surpasses other fuels, transport as well as feedstock, which have been recording less than 1 per cent growth, when they do show positive growth at all. Our estimates show LPG demand will increase further," says Mr Subhash Sahni, Executive Director (LPG SBU), Hindustan Petroleum.

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