Bloated LPG im­port bill fears

Resource Digest - - CONTENTS -

The coun­try's LPG im­port bill is likely to in­crease sub­stan­tially as non-do­mes­tic con­sump­tion grew 25.8 per cent dur­ing the first two months of the fis­cal. It can rise fur­ther fol­low­ing the govern­ment's ef­forts to push cook­ing gas to BPL (be­low poverty line) fam­i­lies and trans­fer the sub­sidy to the bank ac­counts of con­sumers.

Ac­cord­ing to the Petroleum Plan­ning & Anal­y­sis Cell (PPAC), LPG con­sump­tion grew 7.4 per cent in May and 7.8 per cent dur­ing April-may. How­ever, do­mes­tic con­sump­tion rose only 5.7 per cent in May and 6.1 per cent April- May.

Non-do­mes­tic con­sump­tion in­creased 21.5 per cent in May, with a cu­mu­la­tive growth of 25.8 per cent dur­ing April-may.

A non-do­mes­tic 19.2-kg LPG re­fill costs Rs 1,035 in Cal­cutta, while a sub­sidised 14.2- kg do­mes­tic LPG cylin­der costs Rs 423.16.

In­dia plans to al­most dou­ble its LPG im­ports in the next three years to over 16.5 mil­lion tonnes (mt). The coun­try is look­ing to im­port from Bangladesh and Iran be­sides its tra­di­tional sources in West Asia.

LPG im­ports rose 1.6 mt dur­ing April-may this fis­cal against 1.4 mt last fis­cal. The coun­try had im­ported 8.8mt of LPG at $3.8 bil­lion dur­ing 2015-16. How­ever, the spurt in global crude prices can jack up the im­port cost, an­a­lysts said.

Brent prices will av­er­age around $40 per bar­rel in 2016 and is ex­pected to av­er­age $65-$70 per bar­rel by 2020.

The coun­try im­ports 40 per cent of its 21mt LPG re­quire­ment. This will go up as de­mand rises by dou­ble-dig­its fol­low­ing the new con­nec­tions.

The high growth in the con­sump­tion of non-do­mes­tic LPG and the in­crease in its mar­ket share can be at­trib­uted to its easy avail­abil­ity, low price and curbs on the diver­sion of sub­sidised do­mes­tic cylin­ders.

The diver­sion of cheaper and sub­sidised cook­ing gas meant for house­holds to­wards com­mer­cial use has stopped after the govern­ment launched the PAHAL scheme for di­rect trans­fer of sub­sidy to the con­sumers from Jan­uary 2015. Un­der this scheme, LPG is be­ing sold to con­sumers at the mar­ket rate while the sub­sidy is di­rectly cred­ited to their bank ac­counts.

Petroleum min­is­ter Dhar­men­dra Prad­han has said more than Rs 21,000 crore of sub­sidy has been saved by im­ple­ment­ing PAHAL. Be­sides putting an end to the black mar­ket­ing of cheap LPG, 3.34-crore du­pli­cate, in­ac­tive and ghost ac­counts were de­tected and blocked.

Bulk LPG reg­is­tered a pos­i­tive growth of 22 per cent in May and a cu­mu­la­tive growth of 24.2 per cent dur­ing April- May. The per­cent­age share of bulk LPG in to­tal con­sump­tion went up to 2 per cent in May from 1.7 per cent in the same pe­riod a year ago.

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