Economy

Govt manages to hit target on deposit-free LPG connections, but stumped by poor refill orders

Twesh Mishra New Delhi | Updated on September 11, 2019 Published on September 11, 2019

To achieve the disbursal numbers, on an average, nearly 69,000 connections have been released per day, according to data shared by the Ministry of Petroleum and Natural Gas   -  The Hindu

Ujjwala families are hesitant due to upfront high cost of LPG refills, says distributors’ body

Extending subsidies and a renewed push by oil marketing companies have helped the Centre achieve its target of disbursing 8 crore free cooking gas connections before the March 2020 deadline. But providing connections is just one part of the push towards cleaner and reliable cooking fuels.

“Recipients of these deposit-free LPG connections are hesitant to opt for a refill due to the upfront high costs of LPG refills. They are limited by their purchasing power and would use cooking gas sparingly,” Sailesh Jain, Executive President of the All- India LPG Distributors’ Federation, told BusinessLine.

Subsidised cylinders

These liquefied petroleum gas (LPG) connections are being distributed under the Pradhan Mantri Ujjwala Yojana (PMUY) launched in May 2016. On an average, the families with Ujjwala connections are opting for four subsidised cylinders in a year, this is lower than the seven subsidised cylinders that non-Ujjwala connections go for in the same time period.

Initially, there were even lesser LPG refills by Ujjwala families because they were not getting a subsidy till the upfront cost to cover the security deposit and installation fee of a connection (usually ₹1,600 per connection) was recovered by the oil marketing company (OMC). Realising that without LPG refills, the purpose of distributing these connections would be defeated, OMCs decided to forego collecting the upfront amount and stared transferring the full subsidy amounts per refill.

The eight croreth PMUY connection was handed over by Prime Minister Narendra Modi in Aurangabad last week. With this, LPG coverage has now reached 95 per cent of the country (from 56 per cent in May 2014) and the total number of LPG connections has risen from 13 crore connections till May 2014, to more than 26 crore households in 2019.

On an average, nearly 69,000 connections have been released per day, according to data shared by the Ministry of Petroleum and Natural Gas, to achieve these disbursal numbers.

While the number of connections has doubled, domestic LPG consumption has not grown in the same proportion. According to the Petroleum Planning and Analysis Cell, India’s LPG consumption in financial year 2014-2015 stood at 18 million tonnes. During the financial year 2018-19, LPG consumption rose to 24.92 mt, just 38 per cent higher than the 2014-2015 levels despite the number of connections doubling.

According to SP Singh, President, Indian Foundation of Transport Research and Training (IFTRT), the lesser-than-anticipated LPG consumption has multiple pitfalls. LPG tanker operators who were anticipating cooking gas demand to grow significantly as new connections were disbursed also bore the brunt. There are around 45,000 LPG tankers right now in the country that were anticipating an average of three trips per day. But they are now making an average of just 1.5 trips a day as the demand did not take off as expected, he said.

Published on September 11, 2019
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