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State oil companies to add 4,500 LPG distribution centres in FY18

LiveMint logoLiveMint 01-05-2017 Gireesh Chandra Prasad

New Delhi: The rising number of liquefied petroleum gas (LPG) consumers in rural areas is making it viable to set up cooking fuel distribution centres in far-flung villages. Encouraged by the response to distribution licence offers in 2016-17, oil retailers Indian Oil Corp. (IOC), Bharat Petroleum Corp. Ltd (BPCL) and Hindustan Petroleum Corp. Ltd (HPCL) are set to add another 4,500 LPG distributors in 2017-18.

The three companies together commissioned 874 LPG distribution centres in 2016-17, taking the total number of operating distributors to 18,500. They also initiated the process of issuing 2,800 new distribution centres in 2016-17, which are at different stages. These include 1,200 cases where letters of intent have been issued and another 1,600 cases where applications have been called for, a person privy to the companies’ operations said on the condition of anonymity.

“The idea is to have about 28,000 LPG distributorships in the next few years,” said the person.

Another person with knowledge of the expansion drive of state-run fuel retailers said that all the new distribution centres are offered in rural areas. With the number of consumers increasing in rural areas due to the Prime Minister’s Ujjwala Yojana, a scheme for giving deposit-free LPG connections to the poor, it has become viable to have more distribution centres in villages, said the person.

In 2016-17, the government issued 2 crore new security deposit-free LPG connections to women from below-poverty-line households. In the current year, the target is to add another 1.5 crore with the aim of issuing 5 crore connections in three years under the scheme launched in May 2016. Simultaneously, another 5 crore connections are being issued in the normal course. The three oil companies issued a total 3.25 crore new connections last fiscal year, including 2 crore ujjwala yojana connections.

State-owned refinery-cum-retailers are also in the process of adding more LPG bottling plants to cater to the rising demand for the fuel. The three companies will add 47 new bottling plants over the next 24 months to their existing 189 bottling units, expanding their total capacity by nearly 25% to 21 million tonnes in 2018-19. LPG consumption grew 9.8% in 2016-17 to 21.5 million tonnes, aided by the drive to expand the use of clean cooking fuel.

India imported 11 million tonnes of LPG in 2016-17, 25% more than what was imported a year ago.

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