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Satisfying Enormous Growth Potential
7th to 9th October-2009, Rio de Janerio, Brazil
Rural Demand In India
Presentation by:Apurva Chandra,
Joint Secretary(Marketing)Ministry of Petroleum and Natural Gas,
Government of India
LPG Market- Uniqueness of India• Second largest packed LPG market in the world
• LPG in cylinders, home delivered to more than 108 million households.
• Customer population increasing by 6 million each year.
• For better affordability product is subsidized.
• For better logistics by packaging near to market, bottling plants even at remotest corners-
• At Leh highest altitude, • At Andamans the island situated in Bay of Bengal.
• Deployed Latest Technology for • Storage- Cavern
LPG- History & BackgroundLPG- History & Background
• LPG Marketing Commenced in India in 1955– Started by Burmah Shell in Mumbai– Public Sector Oil Company , Indian
Oil Commenced Operation of LPG Marketing in 1965 at Kolkatta and Patna
• Product availability improved from 1998– Customer strength grew from 20M
to 100M in a decade– Sales jumped from 1241TMT in
1985 to 11400 TMT in 2008– Currently catering to more than
50% of Indian population.
• Growth poised more towards rural markets
Customer growth rate(in millions)1985-2009
10.616.2
23.2
47.4
84.5
101.7107.8
0
20
40
60
80
100
120
1985 1990 1995 2000 2005 2008 2009
Sales in TMT1985-2009
1241
2414
3850
5902
9979
11339
0
2000
4000
6000
8000
10000
12000
1985 1990 1995 2000 2005 2008
Various Products Marketed in LPGVarious Products Marketed in LPG• Domestic LPG
– Packed product in 14.2Kg, & 5kg cylinders, home delivered through distributors
• Non Domestic LPG– Packed product 19Kg and 47.5
kg delivered supply through distributors.
• Bulk – Delivered to Storage Tanks of
Customers- Business Associates to garner Customers
• Auto LPG– Through Retail Outlets along
with MS/Diesel and/or stand alone outlets
PACKED DOMESTIC
91%
AUTO LPG2%IND BULK
2%
NON DOMESTIC
5%
PACKED
NDNE
IND BULK
AUTO LPG
Share of Products
Domestic LPG Business OverviewDomestic LPG Business Overview
• Total Customer Strength : 108 M• Average Enrolment (current) : 6 M Yearly• Daily Bottling : 2.4 million• Bottling Plants : 190
Refineries, Gas Processing Plants & Imports
190 Bottling Plants
9382Distributors
108 million Customers
– There is steady growth in LPG consumption in the last 4 years.
(Figs. In TMT)
.
10052
10531(5.5%)
11332(7.6%)
11778(4%)
9000
9500
10000
10500
11000
11500
12000
Domestic LPG
2005-06
2006-07
2007-08
2008-09
LPG Marketing Overview Consumption Pattern - LPG
Slice 30%
Slice 40%
Slice 50%
With LPG87%
Without LPG13%
Slice 30%
Slice 40%
Slice 50%
With LPG17%
Without LPG83%
Urban28%
Rural72%
Urban
Ruralbetween
2000 and 500014%
Above 50003%
below 200083%
Slice 50%
Slice 40%
Population wiseDivision- Rural
Domestic LPG PenetrationDomestic LPG Penetration
Urban- Rural Population
14%
83%
3%
LPG Penetration- Issues in LPG Penetration- Issues in Rural AreasRural Areas
Most of Rural Households natural biomass or kerosene
Biomass based fuels lead to health hazards and pollution
Use of Kerosene by the households at a subsidised rate.
Per Capita Income of rural areas- affordability
Viability of distribution cost as rural households are scattered.
Potential Available in Rural Area- more than 50 million
Vision 2015- Govt.’s Thrust on LPG in Rural Areas
• To enroll total of 55 m new LPG connections by 2015
• 8.5 million every year
• Mostly in Rural areas
• Through existing distributors and Small Format Distributors
• Conversion of Kerosene customers
Strategies for Rural Market- PenetrationStrategies for Rural Market- Penetration
Models to improve reach•Through existing Distribution network• By Expanding Existing model of Distributor Network • Low Cost , Self Employment based LPG distributors as a
viable model•Community Kitchen
Strategies to improve affordability • Continue to give Favorable relative price • Access Subsidization
• For economically Backward• By State Governments• Oil Marketing Companies-
• Corporate Social Responsibility•Conversion of Kerosene
Model based on Viability
• Gramin LPG Vitrak (GLV) meaning Rural LPG Distributor
• GLV sustainable for cluster of villages having about 4500 families. – 40 % population villagers may go for LPG.
Scheme to improve Viability
– 1800 consumers required for sale of 600 cylinders of 14.2 kg per
month.
• Per Capita 5Kg per month
– Proprietor himself to operate with the help of 1 staff
• Option for part time job
– Smaller Godown and showroom located close by
– Cylinders will be sold on cash and carry basis
– Distributorship to those who are in possession of requisite land at
advertised location
Low Cost, Self Employment Rural Model
Community Kitchen
• Scheme introduced in 2003-04 for Community Kitchens in Hospitals, Mid day meal scheme etc.
• Model extended to areas below viability of distributorships and for villagers with low purchasing power.
• Kitchen to be set up by nearest distributor.
• Utensils and stoves through Marketing Companies/State Government.
• Villagers to use facility on user fee basis.
• Care taker by Village officials/Distributor.
Supply Demand Balance
0
3000
6000
9000
12000
15000
2005-06 2006-07 2007-08 2008-09
Year
TM
T
Import
Indigenous Production
Demand
0
3000
6000
9000
12000
15000
18000
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Year
TMT
• LPG Demand Projections
• Expected – CAGR 8%
• Asia Pacific – CAGR 6%
• LPG Supply Outlook
•Existing Refineries being expanded and 3 new Refineries being commissioned.
•However, dependence on Imports to continue
•Two import facilities Kochi & Chennai 1400TMTPA
Historical
Projection
Import
Indigenous Production
Demand
MumbaiVizag
Panipat
Guwahati
Haldia
Vijayawada
Kochi
Barauni
Kanpur
Kandla
Jalandhar
Delhi
Digboi
Chennai
MumbaiHigh
Mangalore
Secunderabad
Ajmer
Paradip
Jamnagar
Loni
HaziraFacility Existing Plan/Under
Construction
Refinery 19 3
Gas Plants 10 -
Import 4(3500TMT) 2(1400TMT)
Bottling Plants
189 13
Pipelines 2182 KM 1000 KM
LPG Infrastructure
Existing Pipelines
Proposed Pipelines
Bhatinda
Kolkatta
Modes of Transportation :
LPG Infrastructure / Logistics
Railway Wagons12%
LPG Pipelines30%
Road Movement 58%
Pipeline contribution upto 35% by 2015
Investment Planned Till 2015Facility Numbers/
CapacityInvestment Million USD
Import Facility 2 (1400 TMTPA)
140
Tankage
Traditional/Mounded 14.3 TMT 50
Cavern 0.1 MMTPA 110
Pipelines
Planned 1000km 515
Investment Planned till 2015Facility Numbers /
CapacityInvestment
Million USD
Bottling Plants
Under Construction 2 X 44 TMTPA 10
Planned 6 x 44 TMTPA 40
Filing Equipments
Augmentation 900 TMTPA 20
Equipments ( Cylinders & Regulators)
65 million 1560
Total 2445
ConclusionConclusion
• In India, LPG is the most sought after fuel for domestic use.
• Government of India has developed a Vision 2015 document for
increasing use of LPG in India.
• The Vision 2015 document is focused to improve customer Service and availability of LPG.
• Government of India is committed to increase the penetration of LPG in Rural India by providing LPG at affordable price.
• As a commitment to Environment, Government of India is also committed to replace kerosene by LPG at the earliest.
Thank YouThank You
Domestic LPG PenetrationDomestic LPG Penetration
UrbanUrban RuralRural TotalTotal
Population March 2009 in Million
326.2 838.8 1165
Households in Million 93.1 156 249
LPG connections in Million
81.2 26.8 108
Penetration 85% 17% 42%
Per capita consumption (Kg/year)
128 83 117
Source : NCAER
Huge Potential Available in Rural Area
Indian LPG ScenarioIndian LPG Scenario
Demand & Production 2004-09 Sources of Bulk LPG
2583 2592
865
1491
2217
2453
1981
0
500
1000
1500
2000
2500
3000
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Import Growth (TMT) Source Countries
Source: PPAC/Industry Figures