ADANI WANTS BAN LIFTED ON LPG EXPORT

Firm plans to export to neighbouring countries

The Gautam Adani-led Adani Group has sought an exemption from the government and a policy change from the Ministry of Petroleum and Natural Gas to be allowed to export liquefied petroleum gas (LPG). Export of LPG is formally not allowed; around half the country’s demand is met through import. Sources indicate the Gujarat-based company is looking at the markets of Sri Lanka and Bangladesh. SHINE JACOB writes

The Gautam Adani-led Adani Group has sought an exemption from the government and a policy change from the ministry of petroleum and natural gas to be allowed to export liquefied petroleum gas (LPG).

Export of LPG is formally not allowed; around half of the country’s demand is met through import.

Sources indicate the Gujarat-based company is looking at the markets of Sri Lanka and Bangladesh.

A panel in the ministry of petroleum is looking into the proposal and is likely to decide soon. “The ministry had a meeting in this regard earlier this month,” said a person close to the development. The company did not respond to e-mailed questions from Business Standard.

Indian Oil-Petronas, a joint venture between Indian Oil Corporation and Malaysia’s Petronas, was the only company that exported LPG from India in recent times. “They exported some volumes and were given a one-time nod. What Adani wants is a change in policy itself and also a nod to re-export,” said a government official.

With a rise in LPG demand of eight per cent in 2017-18, India is the world’s second-largest importer, after China. In FY18, our LPG consumption was about 23.3 million tonnes (mt); a little over 11 mt was imported, from various countries.

“It needs to be seen whether the company is looking to set up a trading hub. Normally, India exports surplus products like naphtha,” said K Ravichandran, senior

vice-president at ratings agency ICRA.

According to reports, Adani Gas had earlier made a plan to connect the 1.6 mt LPG terminal at its Dhamra port in Odisha to Bangladesh. However, it is not clear if it is seeking permission for export from the Gujarat coast or Dhamra. It has the option of importing LPG at Dhamra and then exporting to Bangladesh.

According to official data, the three state-run oil marketing companies (OMCs) together have 224.3 million active LPG customers, served by 20,146 distributors.

“The move to allow export of LPG is illogical when we are having so much demand, following the success of the Ujjwala scheme. This is at a time when OMCs are investing heavily on increasing the local supply,” said a senior official from an industry association.

After launch of the Pradhan Mantri Ujjwala Yojana, the reach of LPG has extended to around 80 per cent of Indian families. There were only 140 mn LPG connections when the current government took charge in mid-2014. The OMCs have a total of 190 LPG bottling plants, the annual capacity being 17.4 mt.