Diesel & LPG usage falls on frequent price hikes, cylinder cap

Written by Pranav Nambiar | New Delhi | Updated: Jul 30 2013, 20:16pm hrs
The periodic hike in diesel prices and the cap on the number of subsidised LPG cylinders per household have dented the consumption of these fuels, early data indicate.

According to Petroleum Planning and Analysis Cell (PPAC) data, LPG consumption has fallen 4% to 3691.1 million metric tonnes (MMT) in the April-June 2013 period. Diesel consumption stood flat at 18.5 mmt in Q1 this fiscal, in contrast to a 10% jump in the same period in 2012-13.

Since April every household is entitled to 9 cylinders of 14.2 kg each at subsidised prices.

Augustine Peter, director-general of PPAC told FE that the LPG cap has led to a section of households moderating cooking gas consumption as they would have to pay market rates on finishing their quota of cylinders. In Delhi for example, the price of subsidised LPG stands at R410.50, these cylinders have a market price of R 832.

Households can legally retain multiple connections, but they must declare that subsidy will not be claimed for the additional connection.

An senior official from an oil marketing company (OMC) said that they are seeing a rise in auto and commercial LPG consumption as households are less willing to divert their limited subsidised LPG cylinders to commercial buyers.

Previously when people had unlimited subsidised LPG cylinders at their disposal they could divert some of it to commercial users at market prices. However with limited cylinders available, they are now more keen to meet domestic needs, said the official.

The oil ministry has begun a clean up act to eliminate black market activity in the LPG market by classifying 26 million LPG connections as 'suspect' cases. the OMCs have since October already blocked around 7 million fraudulent LPG connections.