Questions

1

LPG, Energy Access and the

Indian Context

New Delhi

February 7, 2017

- M K Surana

Questions

2

India : Fast facts

• 18% of the world’s population (1.31 billion in 2015)

with improving urbanization rate

• 3rd largest economy in the world by GDP (PPP basis)

expected to grow at a CAGR ~7-8% through 2040

• 3rd highest in energy consumption - consumes

5.3% of world’s primary commercial energy

• Average energy consumption growth has been 5.3%

p.a. (CAGR-5 years)

Rapidly Expanding energy needs and High demand for energy

• Energy consumption/capita (533 KGOE) is among the lowest in the world with high

growth potential as the economy grows:

• 1/11th of North America’s per capita energy consumption

• 1/6th of European Union consumption

• 1/4th of China and 1/3rd of Global average

Source: PNG Statistics 2015-16, IMF Outlook and World Bank data

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Energy Trends : India

• Energy consumption in India is projected to double, growing by a CAGR of 4.3%

per year to reach ~ 1314 mtoe by 2030.

• The energy mix is projected to change with Renewables & Gas increasing the

share and Oil holding steady.

• Fossil fuels remain the dominant source of energy powering the Indian economy,

providing around 84% of the growth in energy demand (Coal – 43%, Oil – 30% and

Gas -11%) between 2015 to 2030 and accounting for about 89% of total energy

supply in 2030 (down from 93% in 2015).

• Gas is seen to be increasingly used in the industrial sector and for power

generation. Liquid fuels continue to dominate in the Transport sector.

• Among non-fossil fuels, renewables (including biofuels) is projected to grow

rapidly (11.7% p.a.), increasing share in primary energy from 2% in 2015 to reach

6% by 2030.

• Renewables is seen competing with fossil fuels in Power sector.

The degree of Policy measures in carbon emissions will see increased use

of LPG and Natural gas

Questions

4

2015-16 : Consumption of Petroleum Products

HSD = 75 MMT

LPG = 19 MMT

MS = 22 MMT

Naphtha, ATF & SKO = 23 MMT

Others = 33 MMT

Product wise volumes / 5 Y CAGR%

Total Volume = 183 MMT, 5 year CAGR of 5.4%

FO & Bitumen = 11 MMT

2015-16 (Percentage)

4.5%

9.0%

41%

12%

10%

13%

6%

18%

HSD

MS

LPG

Naphtha, ATF & SKO

FO & Bitumen

Others

6.8%

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5

Snapshot of LPG Sales in India

17.2

1.50.4 0.2 0.4

0.0

20.0

Domestic (HH) Commercial Bulk Automotive Private Imports

Total of 19.6* MMT LPG Sales in 2015-16

Sales in MMT

88% 7% 2% 2%Percentage

of Total

123 million Urban

LPG Customers

79 million Rural

LPG Customers

A total of 201 Million LPG Customers (HH) are catered through 14.2

Kg and 5 KG packed LPG cylinders

1%

*Including Private Imports

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India : World's second largest consumer of LPG

Population (2015): 1,311 million

Literacy Rate: 74% (2011 Census)

Customer base (2016): 750 million

Sales: Over 19 Million tonnes

Enabled thru: 190+ LPG Bottling plants

2600+ km LPG Pipelines

18,000 + LPG Distributors

In the last two years, India has embarked on unprecedented

expansion of its LPG reach through several programmes

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7

Census 2011 : Cooking Fuel Mix in India

0% 20% 40% 60% 80% 100%

Urban

Rural Firewood

Crop Residue

Cowdung cakes

coal, lignite, charcoal

kerosene

lpg/png

electricity

biogas

other

no cooking

% of Households

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8

Affordable and Clean Energy

2016 : Year of LPG Consumers

There are 17 Sustainable Development Goals outlined by UN for

2030

Goal 7 is to ensure affordable and clean energy

Sustainable

Goals by UN

India :

Current

Scenario

Enabler:

Policy

environment

India is the home to the largest number people lacking access to

electricity and clean cooking facilities.

Out of every three persons lacking access to clean cooking

fuel, one is an Indian (approximately 840 million out of 2.7 billion).

PaHaL (2014), #GiveItUp

SAHAJ, Digital payment and cashless transactions

Pradhan Mantri Ujjwala Yojana - PMUY (2016)

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PAHAL

• Increase effectiveness and bring in Transparency

• Reduce Subsidy burdenGoI

• Reduce or prevent the unauthorised sale

• De-Duplicate multiple connections

OMCs

• Cash subsidy to buy upto 12 cylinders

• The subsidy amount is transferred directly to the bank account

Customer

Percentage enrolled

> 160 Million (90%)

PAHAL

• Launched: 15th Nov 2014

• Subsidy Transferred:

Rs. 4,149 Billion

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PAHAL : Setting World records

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#GiveItUp: Voluntarily surrender of subsidy

Scheme was launched in May’15 for LPG

consumers willing to voluntary give up subsidy

Against each surrendered subsidy, LPG

connection were issued to BPL family

Consumers opted out of the subsidy by

submitting written request to the distributor or

electronically at mylpg.in.

10 million consumers opted out of subsidy within

one year

> 5.5 million deposit free LPG connections were issued to BPL

families in 2015-16

#GiveItUp

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Pradhan Mantri Ujjwala Yojana (PMUY)

Launch:

• Launched by Hon’ble Prime Minister on 01.05.2016 at Ballia district of U.P.

• Aadhaar of the consumer as the primary key in verification & deduplication activities.

Scheme Details:

• 5 Crore deposit free LPG connections to women beneficiary

• Empowering women by providing access to Clean Cooking Fuel

• To improve the health of women & children

• The ultimate impact is 85% LPG coverage by 2018-19

• Initiative is on ‘Mission Mode’, dedicated, focused approach for smooth, effective &

timely implementation

Selection of Beneficiaries:

• Women beneficiary identified Socio-Economic Caste Census-2011 (SECC-2011)

data.

• Preference for SC/ST & Weaker Sections of Society

Focus States:

• Priority for States having Lower LPG Coverage vis-à-vis National Average of 62%

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PMUY Connections released

0.0 0.1

0.9

1.5

2.2

2.62.4

2.1

3.7

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16

New PMUY Connections (Million Nos)

New PMUY Connections (Million Nos)

A total of 15.3 Million LPG Connections under PMUY scheme have

been released till 31.12.2016.

Target : 50 Million Connections by 2018

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Key Success Factors for PMUY

Detailed planning by Govt. of India

Continuous engagement and support in implementation by MoP&NG

Collaboration among OMCs and structure of District Nodal officer

Camps for customer enrolment and LPG distribution

LPG distributors engagement

Large scale mobilization of LPG equipment

Extensive deployment of Technology

Mission Mode Working by OMCs

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Leveraging IT for moving towards Digital India

Portal in 13 Languages for

rolling out various Govt.

initiatives

e-SV

Enrollment, Payment and

Release onlineOnline refill payment can

be remitted in advance

Toll free Single Number

for LPG compliant in

regional languages

Cashless transactions

Credit card and e-wallet

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Auto LPG Cars in India

Hyundai Eon Magna

Fuel : LPG

Price : 4.5 Lakhs (Ex Delhi)

Mileage ~ 21 km/kg

Hyundai i10 Sportz LPG

Fuel : LPG

Price : 5.4 Lakhs (Ex Delhi)

Mileage ~ 20 km/kg

India : Witnessing increasing number of vehicles with Auto LPG

and Natural gas as Fuels

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Trend of LPG Demand

19.6

30.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

2015-16 2020-21

Projected LPG Demand in MMT

2015-16 2020-21

LPG Demand in the country is expected to grow at CAGR of ~ 9%,

covering > 90% of Country’s households

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Challenges

LPG continue to remain in short supply and India will be dependent on

Imports

The LPG Import capacity will need to be augmented

LPG Pipelines currently at < 20% and have to be augmented for effective

logistics

Affordability by economically weaker section

Safety awareness among new users

Socio cultural issues

Type of houses

Supply end

User end

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Key Messages

LPG to witness a high growth with policies aimed at providing

cleaner cooking fuels and encouraging a move away from solid

biomass for cooking.

e-SV

Most of Indian LPG demand comes from the residential

sector, for use as a cooking fuel. Industries are projected to

consume imported ethane along with naphtha from domestic

refineries

Opportunity in LPG market in India lies in Rural Domestic

Segment

Focused strategies needed to address issues of Availability,

Affordability and Awareness

Questions

Thank you

Questions

21

Key Global Energy Trends

• Weakening energy demand due to decline in China growth, slow recovery

in Europe and shift of fuel mix from Coal to Natural gas in US power sector.

• Increased Supply, due to rapid technology and productivity gains driving

strong growth in US Oil output and growth in other Oil producers like Iraq,

Iran and Saudi Arabia.

• OPEC decided to cut production. However, the global storage inventories

need to be substantially reduced for higher prices to be sustained.

• Non-Fossil fuels grew on the back of growth in new entrants of Solar and

Wind in Power sector, with China becoming the largest generator of Solar

Power.

• Technology costs particularly for wind and solar power have decreased

justifying investments in new capacities.

• Carbon Emissions from energy use witnessed the slowest growth in the

past 2 decades.

Source: Bloomberg, BP Statistical review 2016, Team Analysis

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In India, coal contributes to ~ 58% of energy

consumption

29%

58%

33%

28%24%

7%7% 4%3%

2%4% 1%

World (13,147 mtoe) India (700 mtoe)

2015 : Primary energy consumption comparison

Nuclear

Renewables

Hydro

Gas

Oil

Coal

Source : BP Statistical Review 2016

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Hydrocarbon Sector in India : Salient aspects

Source : BP Statistical Review 2016, MoP&NG

• Third largest consumer of Oil in the world behind US and China.

• Third largest importer of crude oil (188 million tonnes) and Fourth

largest LNG importer (~ 20 Mtoe)

• Produces 0.9% of world oil and consumes 4.5% of world oil demand.

• Produces 0.8% of global Natural gas production and consumes 1.4% of

global gas consumption.

• Consumption of Oil in India grew by 8.1% compared to world growth of

1.9% in 2015.

• Per-capita consumption in Oil is 0.14 toe compared to world average of

0.6 toe.

• Per-capita consumption in Gas is 0.04 toe compared to world average

of 0.4 toe.

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Factors shaping the energy sector

Thrust towards

Clean fuels and Low

carbon emissions

Gas and Alternative

energy increasing

significantly

Emergence of New &

Unconventional

sources of energy

Technology

enhancement and

Cost management

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Plan of Presentation

Global Energy Trends1

Hydrocarbon Sector in India2

LPG Sales and Challenges in India3

LPG initiatives for Affordable and Clean Energy 4

LPG Demand Projections and Key Messages5