Bid & Tender
Refiners to Expand LPG Bottling Capacity to Meet Surging Consumption

Date : Apr 26, 2017

State-owned refiners are planning to add a large number of liquefied petroleum gas (LPG) bottling plants to meet the rising demand for the clean cooking fuel. Indian Oil Corp., Bharat Petroleum Corp. and Hindustan Petroleum Corp. 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, a person with direct knowledge of the matter said, on the condition of anonymity.


The expansion is prompted by a 9.8% surge in LPG consumption in 2016-17 to 21.5 million tonnes, aided by the nationwide drive to promote smokeless kitchens, including through the LPG-for poor-women scheme, the Pradhan Mantri Ujjwala Yojana. In contrast, use of kerosene—primarily used for lighting and cooking in rural areas—dropped by a sharp 21% in 2016-17 from a year ago to 5.3 million tonnes, Mint reported on 17 April, highlighting the a shift in fossil fuel consumption.


The three state oil companies issued a total 32.5 million new connections last fiscal year, the highest-ever, including 20 million connections given under Ujjwala Yojana. To meet the rising consumption, India imported 11 million tonnes of LPG in 2016-17, which was 25% more than what was imported a year ago. At present, state oil companies have a bottling capacity of 16.22 million tonnes, which they will augment to 18 million tonne this financial year, said the person quoted above.


The competitor to LPG (propane) is condensed natural gas (CNG) (methane) which is supplied to homes through pipelines by Gail India Ltd subsidiaries (like Indraprastha Gas Ltd) and private entities. The government is promoting state CNG utilities to develop supply infrastructure in more cities as it also wants to promote the use of natural gas in the economy. With the cost of installing rooftop solar power plants declining, electricity is also set to give competition to two other fuels in the cooking fuel segment. The oil ministry has forecast LPG demand in 2018-19 to touch 26.845 million tonnes, which will be met through indigenous production as well as imports.