Economy

‘Ujjwala connections get three refills annually on an average’

Twesh Mishra New Delhi | Updated on December 21, 2018 Published on December 21, 2018

IndianOil had extended loans to 1.88 crore Ujjwala beneficiaries for LPG Stove and/or their first LPG refills. File photo   -  BusinessLine

Oil companies gear up to meet LPG demand after Ujjwala expansion

The annual average demand for LPG cylinder refills is now three under the Pradhan Mantri Ujjwala Yojana (PMUY) according to IndianOil Chairman, Sanjiv Singh. “The average number of LPG refills in every household across the country was close to seven plus before the Ujjwala scheme was launched. This has now tapered to seven and the Ujjwala households are on an average booking three refills every year,” he told BusinessLine.

According to IndianOil, the company had extended loans to 1.88 crore Ujjwala beneficiaries for LPG Stove and/or their first LPG refills. Till September 2018, the gross loans extended stood at ₹ 3,125 crore out of which ₹ 955.67 crore has been recovered by adjusting the loans against the LPG subsidy. The outstanding loan stood at ₹ 2,169.8 crore as on September end.

The increase in the number of refills can be attributed to improved affordability of LPG refills due to the loan deferment and some behavioural change. Without the loan deferment, a domestic 14.2 kg LPG cylinder was costing around ₹ 800 to ₹ 900 per cylinder. The effective price came down to around ₹ 400 to ₹ 500 a cylinder after the loan deferment.

The Public Sector oil companies have given a loan recovery deferment up to six refills or one year from April 1 this year for the PMUY beneficiaries who have availed the loan facility for hotplate or first refill or both.

The PMUY was launched in May 2016. This scheme initially offered security deposit free LPG connection to the needy whose names figured in the Socio-Economic Caste Census – 2011 data. The eligibility criterion for this scheme was subsequently expanded to include those whose names appeared in other lists that help identify the poor.

On Monday, the Cabinet Committee on Economic Affairs decided to extend the ambit of the scheme to those who have not been considered earlier for release of LPG connections under the PMUY. After this decision, all poor families will be eligible to get a deposit free LPG connection even if their names do not occur in the earlier defined lists that highlight poverty.

The expansion of the Ujjwala scheme and existing trends of consumption will boost India’s LPG demand growth by 6-8 per cent and settle at around 23 million tonne for next financial year according to Singh.

But LPG consumption on an average has been growing at 10 per cent every year till now. Commenting on the reason for the expectations of a muted growth rate in the next fiscal, Singh said, “We are nearing saturation levels for new connections. A household cannot consume excessive LPG even if it wants to. So the demand growth will taper.”

Despite the tapering of growth rate, domestic oil companies will have to step up efforts to meet the demand accruing for LPG in the country. Commenting on the steps, Singh said, “The capacity utilisation of LPG bottling plants has been running over 100 per cent in the country. After technology enhancements, we are now able to operate two shifts in our existing plants. We have also got permission to night shifts in some of our units.”

“The oil companies are also in the process of awarding 60 small LPG bottling plants,” he added.

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Published on December 21, 2018
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