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LPG in India Subsidy with a Purpose WLPGA - North Africa LPG Summit
LPG in India
Subsidy with a Purpose
WLPGA - North Africa LPG
Summit
LPG in India Subsidy with a Purpose WLPGA - North Africa LPG Summit 20 t h

20 t h May 2010 th May 2010

Contents 3. 4. 5. 6. 1. Indian Energy Sector Overview 2. LPG Business scenario Subsidy
Contents 3. 4. 5. 6. 1. Indian Energy Sector Overview 2. LPG Business scenario Subsidy
Contents
Contents
Contents 3. 4. 5. 6. 1. Indian Energy Sector Overview 2. LPG Business scenario Subsidy Evolution
Contents 3. 4. 5. 6. 1. Indian Energy Sector Overview 2. LPG Business scenario Subsidy Evolution
Contents 3. 4. 5. 6. 1. Indian Energy Sector Overview 2. LPG Business scenario Subsidy Evolution

3.

4.

5.

6.

1.

Indian Energy Sector Overview

2. LPG Business scenario

Subsidy Evolution Subsidy current trends LPG Vision 2015 of Indian Government Deregulation attempts

ConclusionLPG Business scenario Subsidy Evolution Subsidy current trends LPG Vision 2015 of Indian Government Deregulation attempts

scenario Subsidy Evolution Subsidy current trends LPG Vision 2015 of Indian Government Deregulation attempts Conclusion
Indian Energy Sector Overview Energy Mix 2008 vs 2032 Energy Mix 2008 • Fossil fuels
Indian Energy Sector Overview Energy Mix 2008 vs 2032 Energy Mix 2008 • Fossil fuels
Indian Energy Sector Overview Energy Mix 2008 vs 2032 Energy Mix 2008 • Fossil fuels

Indian Energy Sector Overview Energy Mix 2008 vs 2032

Energy Mix 2008

Sector Overview Energy Mix 2008 vs 2032 Energy Mix 2008 • Fossil fuels to continue dominant

Fossil fuels to continue

dominant role in the energy mix • Low per capita consumption (377 kgoe) compared to
dominant
role
in
the
energy mix
• Low
per
capita
consumption (377 kgoe)
compared
to
world
average (1660 kgoe)
(377 kgoe) compared to world average (1660 kgoe) kgoe : Kilogram Oil Equivalent Source : IEP
(377 kgoe) compared to world average (1660 kgoe) kgoe : Kilogram Oil Equivalent Source : IEP

kgoe : Kilogram Oil Equivalent

Source : IEP 2006
Source : IEP 2006

Hydro

6%

kgoe : Kilogram Oil Equivalent Source : IEP 2006 Hydro 6% Nuc 1% Oil 31% Gas
kgoe : Kilogram Oil Equivalent Source : IEP 2006 Hydro 6% Nuc 1% Oil 31% Gas

Nuc

1%

: Kilogram Oil Equivalent Source : IEP 2006 Hydro 6% Nuc 1% Oil 31% Gas 9%

Oil

31%

Gas

9%

Coal

53%

Energy Mix 2032

Hydro Nuc 2% 6% Oil 29% Coal Gas 51% 12%
Hydro
Nuc
2%
6%
Oil
29%
Coal
Gas
51%
12%

MMT

TMT

MMT TMT Indian Energy Sector Overview Demand Supply Gap for Crude Oil & LPG Crude Oil
MMT TMT Indian Energy Sector Overview Demand Supply Gap for Crude Oil & LPG Crude Oil

Indian Energy Sector Overview

MMT TMT Indian Energy Sector Overview Demand Supply Gap for Crude Oil & LPG Crude Oil

Demand Supply Gap for Crude Oil & LPG

Crude Oil Present Crude Oil Production: 34 MMTPA

& LPG Crude Oil Present Crude Oil Production: 34 MMTPA 120 0 LPG Demand vs Indigenous

120

0

LPG Demand vs Indigenous Production

Thousand Metric Ton (TMT)

Demand vs Indigenous Production Thousand Metric Ton (TMT) 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Demand Year
Demand vs Indigenous Production Thousand Metric Ton (TMT) 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Demand Year
Demand vs Indigenous Production Thousand Metric Ton (TMT) 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Demand Year
Demand vs Indigenous Production Thousand Metric Ton (TMT) 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Demand Year
Demand vs Indigenous Production Thousand Metric Ton (TMT) 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Demand Year
Demand vs Indigenous Production Thousand Metric Ton (TMT) 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Demand Year
Demand vs Indigenous Production Thousand Metric Ton (TMT) 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Demand Year
Demand vs Indigenous Production Thousand Metric Ton (TMT) 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Demand Year
Demand vs Indigenous Production Thousand Metric Ton (TMT) 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Demand Year
Demand vs Indigenous Production Thousand Metric Ton (TMT) 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Demand Year
Demand vs Indigenous Production Thousand Metric Ton (TMT) 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Demand Year
Demand vs Indigenous Production Thousand Metric Ton (TMT) 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Demand Year
Demand vs Indigenous Production Thousand Metric Ton (TMT) 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Demand Year
Demand vs Indigenous Production Thousand Metric Ton (TMT) 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Demand Year

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

DemandTon (TMT) 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Year Production Import In-spite of continuous efforts demand

Year

Production2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Demand Year Import In-spite of continuous efforts demand - supply

Import2011-12 2012-13 2013-14 2014-15 Demand Year Production In-spite of continuous efforts demand - supply gap is

In-spite of continuous efforts demand - supply gap is increasing. Imports climbing

21000

180
180

130

142 18000

*

15000

12000

9000

6000

3000

108 104
108
104

100

Increasing Gap

80 30 -20 MMTPA
80
30
-20
MMTPA
6000 3000 108 104 100 Increasing Gap 80 30 -20 MMTPA • Product Demand Crude Production

Product Demand

Crude Production

Gap 80 30 -20 MMTPA • Product Demand Crude Production 31 2002 33 33 2003 2004

31

2002

33 33

2003

2004

34

41

2007

2012

Crude Production 31 2002 33 33 2003 2004 34 4 1 2007 2012 : Million Metric

: Million Metric tons Per Annum

Many Initiatives to reduce the

demand-supply gap

Per Annum Many Initiatives to reduce the demand-supply gap – Favorable New Exploration Licensing Policy –

Favorable New Exploration Licensing Policy increase in domestic E&P activities
Focus on strategic alliances / overseas ventures for equity oil

– Focus on strategic alliances / overseas ventures for equity oil Source: PPAC & Working group
– Focus on strategic alliances / overseas ventures for equity oil Source: PPAC & Working group
– Focus on strategic alliances / overseas ventures for equity oil Source: PPAC & Working group
– Focus on strategic alliances / overseas ventures for equity oil Source: PPAC & Working group

Source: PPAC & Working group report XI plan

LPG- Emerging as the Most Affordable Alternative Urban Household Rural Household LPG 17% Other fuels
LPG- Emerging as the Most Affordable Alternative Urban Household Rural Household LPG 17% Other fuels
LPG- Emerging as the Most Affordable Alternative Urban Household Rural Household LPG 17% Other fuels

LPG- Emerging as the Most

LPG- Emerging as the Most Affordable Alternative Urban Household Rural Household LPG 17% Other fuels 83%

Affordable Alternative

Urban Household

Rural Household LPG 17% Other fuels 83%
Rural Household
LPG
17%
Other fuels
83%
Other fuels, 13% LPG 87% Use by Households While 87% of urban households are using
Other
fuels, 13%
LPG
87%
Use by Households
While 87% of urban households are using LPG only 17% of rural population in India
is on LPG.
In rural areas firewood is the most common fuel, considering the availability and
affordability
An affordable alternative is a necessity for Rural masses.
the availability and affordability – – – An affordable alternative is a necessity for Rural masses.

LPG- Products and Share Bulk: 2.2% • LPG market segmentation - Four segments • Domestic
LPG- Products and Share Bulk: 2.2% • LPG market segmentation - Four segments • Domestic
LPG- Products and Share Bulk: 2.2% • LPG market segmentation - Four segments • Domestic

LPG- Products and Share

Bulk: 2.2%

LPG market segmentation - Four segments Domestic LPG

LPG market segmentation - Four segments • Domestic LPG • Fully Subsidized Auto LPG:1.7% N.Dom: 6.9%

Fully Subsidized Fully Subsidized

- Four segments • Domestic LPG • Fully Subsidized Auto LPG:1.7% N.Dom: 6.9% Dom: 89.2% •
- Four segments • Domestic LPG • Fully Subsidized Auto LPG:1.7% N.Dom: 6.9% Dom: 89.2% •

Auto LPG:1.7%

N.Dom: 6.9%
N.Dom:
6.9%
Dom: 89.2% • Current Growth > 6% • 89% of total LPG business Domestic LPG
Dom: 89.2%
• Current Growth > 6%
• 89% of total LPG business
Domestic LPG
NonDomestic LPG
BulkLPG
Auto LPG
• Marketed by Government Oil Companies
Non Dom
Domestic
Non Dom
Au to
Total
YEAR
Packed
(TMT)
Bulk (TMT
(TMT)
(TMT)
Ratio of Dom
to Non dom.
(TMT)
2005-06
9447
283
158
77
9965
95:5
2006-07
9742
425
229
136
10531
93:7
2007-08
10307
578
259
200
11344
91:9
2008-09
10634
713
252
179
11778
90:10
2009-10
11364
879
280
223
12746
89:11
Growth Slow – but Steady • • • Independence in 1947 Initial years with multinationals-
Growth Slow – but Steady • • • Independence in 1947 Initial years with multinationals-
Growth Slow – but Steady • • • Independence in 1947 Initial years with multinationals-

Growth Slow but Steady

•

Independence in 1947

Initial years with multinationals- ESSO, Caltex, Burmah Shell

years with multinationals- ESSO, Caltex, Burmah Shell National Oil Company, IndianOil incorporated in 1959 •

National Oil Company, IndianOil incorporated in 1959years with multinationals- ESSO, Caltex, Burmah Shell • IndianOil Commenced marketing LPG during 1965 in

Shell National Oil Company, IndianOil incorporated in 1959 • IndianOil Commenced marketing LPG during 1965 in

IndianOil Commenced

marketing LPG during 1965 in Calcutta and Patna on east coast
marketing LPG during 1965 in Calcutta and Patna on east coast
marketing LPG during 1965 in Calcutta and Patna on east coast

marketing LPG during 1965 in Calcutta and Patna on east coast

marketing LPG during 1965 in Calcutta and Patna on east coast
marketing LPG during 1965 in Calcutta and Patna on east coast
marketing LPG during 1965 in Calcutta and Patna on east coast
• Catering to >50% of population
• Catering to >50% of population
• Catering to >50% of population
• Catering to >50% of population

Catering to >50% of population

Customer population (in millions)

140

120

100

80

60

40

20

0

1990-2010 116 101.7 84.5 47.4 23.2 16.2 1990 1995 2000 2005 2008 2010
1990-2010
116
101.7
84.5
47.4
23.2
16.2
1990
1995
2000
2005
2008
2010
• Developing country with dependence of Imported Oil • Cheap and affordable oil a priority
Developing country with
dependence of Imported Oil
Cheap and affordable oil a
priority
LPG marketing commenced in
1955 by Burmah Shell in
Mumbai on West coast

0

Sales in TMT 1990-2010 12746 11778 Industry 9965 5902 3850 2414 1990 1995 2000 2005
Sales in TMT 1990-2010
12746
11778
Industry
9965
5902
3850
2414
1990
1995
2000
2005
2008
2010

14000

12000

10000

8000

6000

4000

2000

Objective of LPG Subsidy  After First Oil shock during 1973-74, Government adopted Administered Pricing
Objective of LPG Subsidy  After First Oil shock during 1973-74, Government adopted Administered Pricing
Objective of LPG Subsidy  After First Oil shock during 1973-74, Government adopted Administered Pricing

Objective of LPG Subsidy

After First Oil shock during 1973-74, Government adopted

After First Oil shock during 1973-74, Government adopted Administered Pricing Administrative Pricing Mechanism

Administered Pricing

during 1973-74, Government adopted Administered Pricing Administrative Pricing Mechanism Cost + reimbursement

Administrative

Pricing Mechanism

Cost + reimbursement Oil Marketing Co

12% post tax return on Investments

No Competition

Assured Returns

tax return on Investments No Competition Assured Returns Mechanism (APM). India imports About 80% of its

Mechanism (APM).

India imports About 80% of its Crude Oil requirement and 25% of LPG  Highly
India imports
About 80% of its Crude Oil
requirement and 25% of LPG
 Highly susceptible to
international oil prices.
For development- low Oil Prices
a key factor
Government policy for Stable
domestic LPG prices.
Subsidy - Characteristics  Subsidy- Difference between Desired and Actual Retail Selling Price  Subsidy
Subsidy - Characteristics  Subsidy- Difference between Desired and Actual Retail Selling Price  Subsidy
Subsidy - Characteristics  Subsidy- Difference between Desired and Actual Retail Selling Price  Subsidy

Subsidy - Characteristics

Subsidy- Difference between Desired and Actual Retail Selling Price

 Subsidy is Open Ended Per Cylinder under recovery increases with rising International Oil prices
 Subsidy is Open Ended
Per Cylinder under recovery
increases with rising
International Oil prices
Overall burden increases with
Volume

Under recovery ranges between 15 to 55% of the product cost depending on International prices.

55% of the product cost depending on International prices.  LPG Under Recovery is increasing RSP
55% of the product cost depending on International prices.  LPG Under Recovery is increasing RSP
55% of the product cost depending on International prices.  LPG Under Recovery is increasing RSP
55% of the product cost depending on International prices.  LPG Under Recovery is increasing RSP

LPG Under Recovery is increasing

International prices.  LPG Under Recovery is increasing RSP & Under recovery LPG in14.2KG cylinder-

RSP & Under recovery

LPG in14.2KG cylinder-

Price Rs 310( $ 6.90)

Under recovery Rs 254( $ 5.65)

Kerosene- per Litre

Kerosene- per Litre

Price Rs 9.32 ( $ 0.21 )

Under recovery Rs18.80( $ 0.42 )

Gasoline per Litre

Price Rs 47.93 ( $ 1.07 )

Under recovery Rs 5.52( $ 0.12 )

Diesel per Litre

Price Rs 38.1 ($ 0.85 )

Under recovery Rs5.21 ($ 0.12 )

• De – Regulation Opportunity Lost In April’2002 Indian Government dismantled APM – Initial subsidy
•
• De – Regulation Opportunity Lost In April’2002 Indian Government dismantled APM – Initial subsidy of

De Regulation Opportunity Lost

In April’2002 Indian Government dismantled APM

Initial subsidy of Rs. 67.75($ 1.5) per 14.2 Kg cylinder as on

subsidy of Rs. 67.75($ 1.5) per 14.2 Kg cylinder as on Mar’2002 • To be phased
Mar’2002 • To be phased out in 3 years. Rs 22($ 0.5 )/ year.
Mar’2002
• To be phased out in 3 years. Rs 22($ 0.5 )/ year.
• Then, Retail prices to be market determined in line with international Oil prices. –
• Then, Retail prices to be market determined in line with
international Oil prices.
Due to domestic pressures and high international prices, scheme
extended for five more years .
– Shifted to a scheme with subsidy equally shared by Government,
Upstream & down stream Oil Companies.
– Under-recoveries (Subsidies) of Oil Companies compensated by
– Under-recoveries (Subsidies) of Oil Companies compensated by

Under-recoveries (Subsidies) of Oil Companies compensated by

Under-recoveries (Subsidies) of Oil Companies compensated by Government in the form of bonds Increase in International
Government in the form of bonds

Government in the form of bonds

Increase in International Prices and Resistance from various quarters derailed the deregulation plan.
Increase in International Prices and Resistance from various quarters derailed the deregulation plan.

Increase in International Prices and Resistance from various quarters derailed the deregulation plan.

Increase in International Prices and Resistance from various quarters derailed the deregulation plan.
LPG Domestic- Subsidy Trend in RS. 598.41 578 600 557 550 483 457.39 Desired RSP
LPG Domestic- Subsidy Trend in RS.
598.41
578
600
557
550
483
457.39
Desired RSP
per 14.2 Kg Cyl
500
456.15
407.6
453.08
450
400
406.83
357.21
310.35
378.5
350
310.35
294.75
279.7
300
263.2
304.7
304.7
Actual RSP of
14.2 Kg cyl
279.7 279.7
294.75
281.2
281.2
294.75
250
50000
In Rs. Crores
40000
30000
20000
10000
2004-05
0
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
3751
9480
14384
17883
19102
28225
17364
PDS SKO
2005-06
5523
8362
10246
10701
15523
17600
14257
Dom. LPG
150
2723
2027
7332
5181
5151
Petrol
2006-07
2154
12647
18776
35166
52286
9279
Deisel
1-Mar-08
1-Oct-08
1st
Dec
2008
1st Feb
1st 2009 August
April 09
1st
1st 2009 1st
Nov
Jan 09 April 2010 2010
1st
• Subsidy- Distortions • Diversion of subsidized product to commercial and Auto LPG use. –
• Subsidy- Distortions • Diversion of subsidized product to commercial and Auto LPG use. –

• Subsidy- Distortions • Diversion of subsidized product to commercial and Auto LPG use. – Loss

Subsidy- Distortions

Diversion of subsidized product to commercial and Auto LPG use.

Loss of revenue to

Government, Oil Companies

All strata of society i/c rich enjoying subsidy.

In efficient and excessive

consumption

Absence of competition. No investment from Private

players

First Order

No investment from Private players First Order – Losses to Government/OMCs • Second Order –

Losses to

Government/OMCsinvestment from Private players First Order – Losses to • Second Order – Demand Supply Functions

• Second Order – Demand Supply Functions ( Refineries making LPG instead of more efficient
Second Order
Demand Supply Functions
( Refineries making LPG
instead of more efficient
basket)
Inter fuel Substitution
Third Order
– Diversion
Governance
Policy/Investments
Domestic LPG Business Overview All India • Total Customer Strength : 114 M • New
Domestic LPG Business Overview All India • Total Customer Strength : 114 M • New

Domestic LPG Business

Overview
Overview
All India • Total Customer Strength : 114 M • New Customers(2009-10) : 8.5 M
All India
• Total Customer Strength
:
114 M
• New Customers(2009-10) : 8.5 M
• Daily Bottling
: 2.7 million cyl
• Bottling Plants
:
182
Refineries, Gas Processing Plants & Imports
182 Bottling Plants
9396Distributors
114 million Customers

Supplying to more than 50% of Indian Population

Plants even in remotest parts

such as Leh (highest altitude of 11,800 Ft above sea level)

and Andamans (Farthest

islands)

even in remotest parts such as Leh ( highest altitude of 11,800 Ft above sea level)
Domestic LPG Consumption Per Capita Decreasing! Consumption in a Year(KG) Year Per Capita( Per Year)
Domestic LPG Consumption Per Capita Decreasing! Consumption in a Year(KG) Year Per Capita( Per Year)
Domestic LPG Consumption Per Capita Decreasing! Consumption in a Year(KG) Year Per Capita( Per Year)

Domestic LPG Consumption Per Capita Decreasing!

Consumption in a Year(KG)

Year Per Capita( Per Year) 2005-06 109.8KG(7.7Cyl) 2006-07 106.6KG(7.5cyl) 2007-08 105.6KG(7.4cyl) 2008-09
Year
Per Capita( Per
Year)
2005-06
109.8KG(7.7Cyl)
2006-07
106.6KG(7.5cyl)
2007-08
105.6KG(7.4cyl)
2008-09
102.9KG(7.2cyl)
2009-10
100.0KG(7.0cyl)

112

110

108

106

104

102

100

98

96

94

100.0KG(7.0cyl) 112 110 108 106 104 102 100 98 96 94 2005-06 2006-07 2007-08 2008-09 2009-10
100.0KG(7.0cyl) 112 110 108 106 104 102 100 98 96 94 2005-06 2006-07 2007-08 2008-09 2009-10
100.0KG(7.0cyl) 112 110 108 106 104 102 100 98 96 94 2005-06 2006-07 2007-08 2008-09 2009-10
100.0KG(7.0cyl) 112 110 108 106 104 102 100 98 96 94 2005-06 2006-07 2007-08 2008-09 2009-10
100.0KG(7.0cyl) 112 110 108 106 104 102 100 98 96 94 2005-06 2006-07 2007-08 2008-09 2009-10
100.0KG(7.0cyl) 112 110 108 106 104 102 100 98 96 94 2005-06 2006-07 2007-08 2008-09 2009-10
100.0KG(7.0cyl) 112 110 108 106 104 102 100 98 96 94 2005-06 2006-07 2007-08 2008-09 2009-10
100.0KG(7.0cyl) 112 110 108 106 104 102 100 98 96 94 2005-06 2006-07 2007-08 2008-09 2009-10
100.0KG(7.0cyl) 112 110 108 106 104 102 100 98 96 94 2005-06 2006-07 2007-08 2008-09 2009-10
100.0KG(7.0cyl) 112 110 108 106 104 102 100 98 96 94 2005-06 2006-07 2007-08 2008-09 2009-10
100.0KG(7.0cyl) 112 110 108 106 104 102 100 98 96 94 2005-06 2006-07 2007-08 2008-09 2009-10
100.0KG(7.0cyl) 112 110 108 106 104 102 100 98 96 94 2005-06 2006-07 2007-08 2008-09 2009-10
100.0KG(7.0cyl) 112 110 108 106 104 102 100 98 96 94 2005-06 2006-07 2007-08 2008-09 2009-10
100.0KG(7.0cyl) 112 110 108 106 104 102 100 98 96 94 2005-06 2006-07 2007-08 2008-09 2009-10
100.0KG(7.0cyl) 112 110 108 106 104 102 100 98 96 94 2005-06 2006-07 2007-08 2008-09 2009-10
100.0KG(7.0cyl) 112 110 108 106 104 102 100 98 96 94 2005-06 2006-07 2007-08 2008-09 2009-10

2005-06

2006-07

2007-08

2008-09

2009-10

More and more customer enrolment from lower strata of society and multiple connections Affordable prices necessary for lower strata of society.

Affordable prices necessary for lower strata of society. • 66% of the Population consuming less than
Affordable prices necessary for lower strata of society. • 66% of the Population consuming less than
Affordable prices necessary for lower strata of society. • 66% of the Population consuming less than
Affordable prices necessary for lower strata of society. • 66% of the Population consuming less than
Affordable prices necessary for lower strata of society. • 66% of the Population consuming less than

66% of the Population consuming less than 6 cylinders per annum

• • • Efforts by Government to Popularise LPG- Vision 2015 Increase LPG penetration by
•

• • • Efforts by Government to Popularise LPG- Vision 2015 Increase LPG penetration by Access
• • • Efforts by Government to Popularise LPG- Vision 2015 Increase LPG penetration by Access
•
• • • Efforts by Government to Popularise LPG- Vision 2015 Increase LPG penetration by Access
• • • Efforts by Government to Popularise LPG- Vision 2015 Increase LPG penetration by Access

Efforts by Government to Popularise LPG- Vision 2015

• • Efforts by Government to Popularise LPG- Vision 2015 Increase LPG penetration by Access Subsidisation

Increase LPG penetration by

Access Subsidisation

Free of Cost LPG Cylinder

and regulator by

Oil Marketing Company

Community Kitchen

Common kitchen where

10 to 20 families can cook

Kitchen to be set up by Oil Marketing companies

Operation by

Local administration

Charges based on time slots

Enrolling 10 million new customers per year till 2015 to enhance the reach of LPG to 75% of population from current level of 50%

Access subsidization by providing free of cost equipments for converting Kerosene customers to LPG

of cost equipments for converting Kerosene customers to LPG • Low Cost LPG distributorships (Rajiv Gandhi
of cost equipments for converting Kerosene customers to LPG • Low Cost LPG distributorships (Rajiv Gandhi
of cost equipments for converting Kerosene customers to LPG • Low Cost LPG distributorships (Rajiv Gandhi

Low Cost LPG distributorships (Rajiv Gandhi Gramin LPG Vitarak) for remote /rural areas.

Availability Community of Kitchens LPG at low prices - a pre-requisite for

Successful implementation of initiatives

De-regulation Deployable Themes Subsidy can be administered only by segmentation and/or restricting the sale of
De-regulation Deployable Themes Subsidy can be administered only by segmentation and/or restricting the sale of

De-regulation Deployable Themes

De-regulation Deployable Themes Subsidy can be administered only by segmentation and/or restricting the sale of number
De-regulation Deployable Themes Subsidy can be administered only by segmentation and/or restricting the sale of number

Subsidy can be administered only by segmentation and/or restricting the sale of number of cylinders per family based on average per capita consumption per annum i.e. fixed quota per customer per annum.

per annum i.e. fixed quota per customer per annum. • • Subsidy shall be phased out
per annum i.e. fixed quota per customer per annum. • • Subsidy shall be phased out

•

Subsidy shall be phased out step by step.

per annum. • • Subsidy shall be phased out step by step. Use of Technology a

Use of Technology a major tool in administering subsidy.

Increasing prices inevitable.

be phased out step by step. Use of Technology a major tool in administering subsidy. •
be phased out step by step. Use of Technology a major tool in administering subsidy. •
• • Use of Technology Segmentation and targeting subsidy in a country with 1.2 billion
• • Use of Technology Segmentation and targeting subsidy in a country with 1.2 billion

• • Use of Technology Segmentation and targeting subsidy in a country with 1.2 billion population
• • Use of Technology Segmentation and targeting subsidy in a country with 1.2 billion population

• • Use of Technology Segmentation and targeting subsidy in a country with 1.2 billion population
• • Use of Technology Segmentation and targeting subsidy in a country with 1.2 billion population
• • Use of Technology Segmentation and targeting subsidy in a country with 1.2 billion population

Use of Technology

Segmentation and targeting subsidy in a country with 1.2 billion population

Technological Solutions

Biometric based distribution pilot planned in three cities

Fully aligned with Unique ID project by Government of India- Expected Smart Card

ID project by Government of India- Expected Smart Card – Pilot on RFID tags on cylinders

Pilot on RFID tags on cylinders underway.

Smart Card – Pilot on RFID tags on cylinders underway. • If successful , largest project

If successful , largest project in the world to tag

RFID tags on cylinders underway. • If successful , largest project in the world to tag

more than 180million cylinders

RFID tags on cylinders underway. • If successful , largest project in the world to tag
• Conclusions International analysts look at subsidy sceptically – By books any subsidy is bad
•
• Conclusions International analysts look at subsidy sceptically – By books any subsidy is bad •

Conclusions

International analysts look at subsidy sceptically

By books any subsidy is bad

• For Indian LPG, subsidy is a double edged sword to steer way for
For Indian LPG, subsidy is a double edged
sword to steer way for
– –
subsidy is a double edged sword to steer way for – – – • Cheaper fuel

Cheaper fuel for masses Cleaner fuel for mankind

Subsidy per-se is not bad, if administered

effectively and targeted rightly.

not bad, if administered effectively and targeted rightly. Ensuring subsidy reaches targeted segment is a challenge

Ensuring subsidy reaches targeted segment is a challenge

Oil Companies and Government of India are mastering the art of better subsidy administration through deployment of right technology

administration through deployment of right technology – Avoid subsidizing the Product. Instead targeted
administration through deployment of right technology – Avoid subsidizing the Product. Instead targeted
–

Avoid subsidizing the Product. Instead targeted customers to be

given subsidy directly.

THANK YOU
THANK YOU

THANK YOU