LPG in India

Overview

The three days of events in Delhi in February 2019 will be an opportunity for the global LPG industry, along with development agencies, NGOs, academia and private sector representatives to hear about the remarkable transformation taking place in the Indian LPG sector. The days’ discussions will focus on understanding the innovative strategies by India to increase access to LPG currently being implemented in India at a scale and with an ambition that has never been attempted before. This will be an important opportunity for the Indian LPG industry to showcase these ground-breaking programmes to other developing world regions and to explore the ancillary benefits of LPG use in terms of health and environmental outcomes.


LPG in India

Serving a base of over 750 m consumers, India is the world’s second largest consumer of LPG in the domestic sector, doing over 18 million tonnes each year. This is achieved through more than 200 LPG Bottling Plants operational across the country.

In the last two years, India has embarked on unprecedented expansion of its LPG reach through several programmes, some of them being:


Pradhan Mantri Ujjwala Yojana

Pradhan Mantri Ujjwala Yojana was launched on 1st May 2016 from Ballia in Uttar Pradesh. Under the PM Ujjwala Yojana, the government aims to provide LPG connections to BPL households in the country. The scheme is aimed at replacing the unclean cooking fuels mostly used in rural India with the clean and more efficient LPG.

Ujjwala Yojana is aimed at providing 5 Crore LPG connections in the name of women in BPL (Below Poverty Line) households across the country. The government has set a target of 5 Crore LPG connections to be distributed to the BPL households across the country under the scheme. Some of the objectives of the scheme are:

  • Empowering women and protecting their health.
  • Reducing the serious health hazards associated with cooking based on fossil fuel.
  • Reducing the number of deaths in India due to unclean cooking fuel.
  • Preventing young children from a significant number of acute respiratory illnesses caused due to indoor air pollution by burning fossil fuel.


PAHAL

The world’s largest cash subsidy under the Direct Benefit Transfer Scheme was launched by the Union Government in November 2014 in 54 districts and was extended all over the country from January 1, 2015. The scheme was launched for the consumers of Liquid Petroleum Gas (LPG). The modified scheme is referred to as Pratyaksh Hanstantarit Labh or PAHAL DBTL (Direct Benefit Transfer of LPG).

All stakeholders benefit from the PAHAL scheme:

  • For LPG consumers: All consumers using LPG cylinders will get cash subsidy to buy 12 14.2-kg cylinders or 34 5-kg refills. The amount of money which is equal to the difference between the present subsidised rate and the market price is automatically transferred to the bank account of the consumer, when he or she makes the first booking for a cylinder. However, this is possible only after joining the scheme. When the consumer takes the delivery of the cylinder, another advance subsidy is transferred to the bank account.
  • For Government: This scheme will reduce or prevent the unauthorised sale of LPG cylinders at higher rates. The purchase of multiple gas connections will be prevented. Accordingly, the subsidy burden for the Government will be reduced.
  • For oil marketing companies (OMC): The LPG gas distributors won’t have many burdens of sending the cylinders to the intermediate gas suppliers. They will be in direct contact with their consumers, thereby building a good customer relationship. Multiple unauthorized connections won’t be provided. The OMCs will be able to ensure that the consumers receive the LPG gas at one fixed rate and do not have to stand in long queues if they had made the booking well in advance.


GiveItUp

Domestic LPG is heavily subsidized by the Government of India and every cylinder that we use in our kitchen carries a substantial subsidy. This translates to a huge annual subsidy burden on the Government, draining precious resources which otherwise could have been used in developmental activities. Subsidy on domestic LPG instead of being universal needs to meet the needs of the truly needy citizens. Fortunately, many able and aware citizens are not in favor of subsidies and would rather pay the full price for the products and, thereby they also make a personal contribution towards nation-building. Accordingly, the Government has launched the ‘#GiveItUp’ campaign which is aimed at motivating LPG users who can afford to pay the market price for LPG to voluntarily surrender their LPG subsidy.

More than 12 million people responded to PM’s call for giving up the subsidy. Those who have decided to give up their subsidies have to buy the product at the market price. The surrendered subsidy is used by the government to provide cooking gas connection to the poor in rural households free of cost.

On March 27, 2015 PM had officially launched the 'Give-it-Up' campaign, urging the well-off to surrender their LPG subsidy so that it can be targeted for the needy. The aim is also to bring down the country's dependence on energy imports by 10 percent by 2022. The country has 15.34 crore LPG connections, of which 12 crore have now given up subsidies. LPG subsidy is transferred to beneficiaries directly in their bank accounts in advance.

"Gas cylinders surrendered by them would be transferred to the poor who use wood for cooking. If one crore people give up their LPG subsidy, one crore poor people will benefit as they will be given new LPG cylinders instead," PM had said.

Consumers can opt out of the subsidy by submitting a written request to the distributor or electronically at mylpg.in.