LPG burning bright

Updated: Aug 31 2013, 07:45am hrs
The government hopes to curb leakages in the LPG subsidy with the help of the direct benefit transfer scheme which is to be extended in 35 districts from September 1 and then, in phases, throughout the country

Indias tryst with liquefied petroleum gas (LPG) began in 1955, when the then Burma Shell started marketing LPG in Mumbai. LPG has, over the last six decades, become the most popular kitchen fuel. The expansion story can be written in two parts with 1980 as the watershed year. Prior to 1978, the marketing of LPG was restricted to the extent of product availability from indigenous sources. Large-scale expansion of LPG marketing was undertaken from 1980 with the increase in product availability due to expansion of refineries and setting-up of extraction units. As the popularity of LPG increased, its demand rapidly outstripped the indigenous availability necessitating large-scale imports.

In the early years, LPG marketing was restricted to only urban areas. Subsequently, the penetration of LPG was slowly expanded to semi-urban and rural areas as well.

Today, LPG in India has reached over 15 crore (15.43 crore as on July 1, 2013) households, which roughly translates to more than 60% of the population. Few would have ever imagined that with its humble beginnings in 1955, and considerable reservations regarding its acceptability, LPG would go on to acquire this popularity one day.

A clean and green fuel

A comparison between the smoke-riddled, hot and blackened kitchens of the past and the ultra-modern, sleek kitchens of today using LPG would be sufficient proof of the clean, friendly and convenient nature of LPG compared to other fuels like coal, wood or cow-dung cakes.

In view of its obvious benefits, the government decided to provide subsidised LPG for cooking, so that more and more kitchens would be persuaded to adopt this fuel and turn safe and hygienic. Today, India is the fifth-largest consumer of LPG in the world after the US, China, Saudi Arabia and Japan. However, with almost 90% of its LPG consumption in the domestic sector, India is the third-largest consumer of domestic LPG after the US and China. A mind-boggling near-3 million LPG cylinders are door-delivered every day (i.e. 900 million a year) to cater to the 15 crore households in the country.

Reaching the hinterland

The rapidly growing popularity of LPG threw up the concomitant logistic issuesthe need for developing a nationwide supply chain, maintaining an uninterrupted supply chain, shouldering the mounting subsidy bill and endeavouring to minimise malpractices. It is to the credit of the government and its public-sector oil marketing companies (OMCs), viz Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum, that a huge network comprising 12,791 LPG distributorships and 186 LPG bottling plants have been set up across the length and breadth of the country, including some of the most inhospitable terrain, like in Leh (Ladakh) and the Andaman & Nicobar Islands. These are serviced by the 22 Indian refineries providing an uninterrupted supply of LPG.

The government has plans to expand the infrastructure particularly setting up more bottling plants in the rural and semi-urban areas to ensure the reach of LPG in the hinterland.

Until recently, the PSUs marketed LPG only in towns and cities with a minimum population of 20,000. However, the Rajiv Gandhi Gramin LPG Vitrak Yojana started in 2009 has expanded the reach of LPG to the smaller towns and villages. Of the total 6,619 LPG distributorships advertised under this scheme, around 2,200 have already been commissioned, thereby ensuring the reach of this safe, reliable and convenient fuel in these rural markets. In addition to expanding LPG's reach, the scheme has pro-poor features including release of LPG connection to BPL families with funding of security deposit from CSR funds of OMCs, allotment of distributorship to the local (panchayat) domiciles, women empowerment through mandatory partnership of spouse, etc. The success of the scheme can be appreciated from the fact that 38.8 lakh LPG customers including 1.42 lakh BPL families have been enrolled through these distributorships as on July 1, 2013.

Prioritising customer convenience

The government is constantly striving to provide LPG at the customers doorstep as well as ensuring the highest service standards. With this twin objective in mind, a number of novel initiatives have been introduced including the rating of distributors based on the time taken for delivery and making their performance available online on the LPG transparency portals of the PSUs. This would ensure that barring supply bottlenecks beyond human control, LPG cylinders are made available to customers as quickly as possible.

The government has also introduced connection portability on a pilot-basis in Chandigarh which empowers customers to change distributors online, in the event she/he is not satisfied with the service. Portability would be rolled out in a phased manner.

With the development of mobile applications for booking and tracking of cylinder refills, technology has been successfully harnessed to increase the customer convenience quotient. A single toll-free complaint number (18002333555) is now operational across PSUs to provide grievance redress. Consumers can now also rate their dealers on the company portal/transparency portal.

Direct transfer of subsidies

Delivery of subsidised LPG to the intended beneficiaries has always been a cherished goal of the government but plugging leaks in the system has been a herculean task. The enormity of the issue can be assessed by the amount of subsidy given by the government to keep kitchen fuel bills under control over the years. The subsidy bill on account of domestic LPG in FY13 alone has been Rs 41,547 crore. In order to ensure that subsidies reach the targeted segment, the government has introduced the direct benefits transfer for LPG (DBTL), whereby the subsidy on LPG cylinders for domestic usage, currently around Rs 465 per cylinder, is being directly transferred to bank accounts of the beneficiaries. This scheme has been rolled out on a pilot-basis on June 1, 2013, in 18 districts, on July 1, 2013, in Mysore and on August 1, 2013, in Mandi, across 8 States and 2 UTs which have high Aadhaar penetration. Going by the results so far, DBTL scheme has been a great success with over 4 million transactions carried out and over Rs 150 crore cash transferred directly to the accounts of LPG customers in these 20 districts.

The scheme will be extended to another 35 districts on September 1, 2013, after which it will be extended to the rest of the country in a phased manner.

Transparency portal

To educate LPG customers online in various aspects of sales and distribution of LPG, a transparency portal was launched on June 22, 2012. The portal is a major step in the direction of bringing transparency in supply of subsidised LPG as it provides all related information. The customers and distributors are now more vigilant about receipt and delivery of LPG cylinders. This information sharing has proved to be a powerful social audit mechanism also.

With the new initiatives, LPG would soon be reaching far-off corners of India to make cooking a more convenient experience. The expansion drive along with measures for providing transparent and better consumer services will go a long way in improving the quality of life including in rural and remote areas.

P Kalyanasundaram

The author is joint secretary, ministry of petroleum

and natural gas