OMCs to invest nearly Rs 30,000 cr in LPG infrastructure in next 3 years

Industry: Oil and Gas 2017-05-06

On the back of the Pradhan Mantri Ujjwala Yojana’s (PMUY’s) success, oil marketing companies (OMCs) like Indian Oil Corporation (IOC), Bharat Petroleum Corporation and Hindustan Petroleum Corporation are set to jointly add Rs 25,000-30,000 crore to expand their liquefied petroleum gas (LPG) infrastructure in the next three years. The investment push is aimed at achieving 95 per cent LPG penetration in the country by 2020.

Currently, India is the second largest LPG consumer in the world with the Narendra Modi government adding 60 million connections in the past two years. In 2016-17 only, the country added 20 million connections under PMUY and another 10.25 million connections through the non-Ujjwala route.

“Now, we are planning to infuse another Rs 25,000-30,000 crore in LPG infrastructure, including setting up of new bottling plants. By 2020, we expect LPG penetration in the country to be about 95 percent from the current level of 72 percent. We expect a saturation in growth by 2020,” said petroleum minister Dharmendra Pradhan, addressing a press conference to mark the first anniversary of PMUY in Delhi. The scheme, which has so far added 21.7 million families, was launched on May 1, 2016, in Uttar Pradesh’s Ballia district.

“Our LPG demand is increasing annually by about 10 percent now. Hence, to meet the set target, we will have to come up with these investments within the next three years,” IOC Chairman B Ashok told Business Standard. Currently, India imports about 50 percent of its LPG requirement from abroad. Pradhan added that keeping this in mind, the country is coming up with its longest LPG pipeline from the Kandla coast in Gujarat to Gorakhpur in eastern Uttar Pradesh —covering Ahmedabad, Ujjain, Bhopal, Kanpur, Allahabad, Varanasi, and Lucknow. This is expected to carry 3.75 million tonnes of LPG a year and cover 2,650 km. The project may see an investment of about Rs 7,000 crore.

“For every 10 million connections, we need investments worth Rs 10,000 crore on LPG infrastructure. We added 4,600 new distributors in the past three years and would like to increase this number to the tune that we will have at least one distributor every 7-10 km,” Pradhan added.

Under the PMUY scheme, the government is looking to provide 50 million gas connections in three years, for which the government has allocated Rs 8,000 crore. The government support comes to the tune of Rs 1,600 for each family. Pradhan stated that the government is planning to increase the target number considering the success of the scheme and that the Union Finance Ministry is set to take a call on this soon.

Modi’s pet social sector scheme is considered to be a major catalyst in registering a massive win for the Bharatiya Janata Party in the recently concluded elections in Uttar Pradesh, Uttarakhand, and local body polls in Odisha and Maharashtra. “Before the launch of PMUY, the LPG penetration in Uttar Pradesh was a mere 53 per cent, which has zoomed to 74 per cent now. This is almost the same in states like Bihar, Odisha, Chattisgarh and Madhya Pradesh, where the penetration was low,” he added.

Growing penetration

1) So far, PMUY has added 21.7 million families since May 1, 2016, when it was kicked off at Ballia district in Uttar Pradesh.

2) Modi’s pet social sector scheme is considered to be a major catalyst in registering a massive win for the BJP in the recently concluded elections in Uttar Pradesh, Uttarakhand, and local body polls in Odisha and Maharashtra.

3) For every 10 million connections, investments worth Rs 10,000 crore on LPG infrastructure are required.

4) India added 4,600 new distributors in the past three years and plans to have at least one distributor every 7-10 Km soon

Source: Business-Standard

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