Bloated LPG import bill fears
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.