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LATEST NEWS UPDATES | LPG use in country falls due to cap on subsidized cylinders -Rajesh Chandramouli

LPG use in country falls due to cap on subsidized cylinders -Rajesh Chandramouli

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published Published on Jun 22, 2013   modified Modified on Jun 22, 2013
-The Times of India


CHENNAI: A tight vigil against diversion of subsidized fuel meant for domestic use seems to be paying off. The consumption of liquefied petroleum gas (LPG), commonly called cooking gas, has started to dip since government capped sale of subsidized cylinders to every household and for the first time ever, sales have fallen for two successive months in comparison to the corresponding period of the previous year. Consumption fell 0.7% in April 2013 over April 2012 while in May the fall was more pronounced at 5.2%.

The government capped the number of LPG cylinders for a household to six a year effective September 2012, but later enhanced the limit to nine per year in January 2013 under pressure from political allies. Each subsidized 14.2 kg LPG cylinder is priced at Rs 398 in Chennai and Rs 410 in Delhi, while the price of non-subsidized refill costs Rs 792 in Chennai and Rs 802 in Delhi. Any consumption beyond nine cylinders is not subsidized.

During April-May 2013, cooking gas consumption in India fell to 2.4 million tonnes from 2.5 million tonnes in April-May 2012, a fall of 3.3%, according to provisional data from the three state-owned oil marketing companies. This includes both piped as well as bottled LPG. Oil planners had anticipated a 4-6% growth in LPG consumption for the 2013-14 fiscal. But, early figures suggest growth may be slower. LPG consumption grew around 10% in 2011-12 before it dropped sharply to 1.8% in 2012-13. "Households now realize the need to hold back LPG cylinders only for cooking purposes as any usage more than stipulated limits will cost them significantly," oil industry sources told TOI.

Interestingly, while sales of the 14.2-kg cylinder meant for domestic use has dipped, officials said consumption of the 19-KG cylinder meant for commercial purposes has grown around 10% since September 2012 (when the order to cap subsidized cylinder was announced). "The growth in consumption of auto LPG has been nearly 20% since September," the official said.

While it is evident that diversion of subsidized LPG for commercial and automotive purposes has halted, some analysts also attribute it to a slump in industrial activity. "Consumption of all petroleum products in May 2013 was a meagre 1.7%, as per provisional data. That is because of economic slowdown. LPG consumption could also be low because of slowdown effect," an analyst said.

Not just LPG, a combination of factors including a slowdown in sales of diesel vehicles, drop in prices of furnace oil and overall sluggishness in economic activity has resulted in a dip in diesel consumption too. During April-May 2013, diesel consumption grew 5.9% at 12.5 million tonnes as against 11.8 million tonnes in the comparable period in 2012. In fact in April, diesel consumption was a poor 4.2%. Overall diesel consumption growth for 2012-13 was at 6.8% compared to 7.8% during 2011-12.


The Times of India, 22 June, 2013, http://timesofindia.indiatimes.com/india/LPG-use-in-country-falls-due-to-cap-on-subsidized-cylinders/articleshow/20708888.cms


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