`Logistical bottlenecks in sourcing it from Mangalore terminal'

V. Sajeev Kumar

Currently, IOC is importing LPG through the Mangalore port for distribution in southern States.

Kochi, Nov. 8

Indian Oil Corporation has come out with a proposal to the Cochin Port Trust to convert the existing oil terminal at the port to handle LPG imports for the public sector company.

Discussion

IOC has approached the port with this request and both the parties have held a couple of discussions. A final decision in this regard will be taken soon, the port Chairman, Mr N. Ramachandran, told

Business Line

.

With the commissioning of single point mooring by BPCL-Kochi Refinery, oil cargo handling at the port would decline substantially resulting in tangible revenue loss.

Given this scenario, Mr Ramachandran said that allowing IOC's request would make good on the losses the port may make.

The oil company could handle LPG imports at the port and transfer it to its bottling plant at Irumpanam near here. Currently, it is importing LPG through the Mangalore port for distribution in southern States.

According to IOC sources, an import facility for LPG in Kochi could be an ideal investment considering the logistical bottlenecks in sourcing it from Mangalore for catering to the Kerala market.

To meet the growing domestic LPG demand, the oil companies are importing it through the Mangalore terminal and transporting bulk LPG by road to various bottling plants in Kerala, thereby, incurring huge cost.

Unless BPCL-Kochi Refinery decides to increase its production capacity, the only way out is imports, the sources said.

Demand

The LPG demand in Kerala is expected to grow by about 3 to 5 per cent per annum for the next five years as more and more domestic consumers are switching over to it LPG as well as increase in auto gas usage.

Market demand for LPG from domestic and commercial sectors is about 38,000 tonnes per month.

About 20,000 tonnes is being sourced from BPCL-Kochi Refinery and the remaining is imported through Mangalore.

According to sources, the per capita consumption of domestic LPG in Kerala is 7.2 kg per month.

The PSU oil companies have invested adequately in bottling capacity in the State.

IOC has three bottling plants, BPCL two and HPCL one.

In addition, HPCL is getting packed LPG supplies from Mangalore Refinery to feed its customers in North Kerala markets, the sources added.

(This article was published in the Business Line print edition dated November 9, 2006)
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