BPCL Running Pilot On New LPG Uses

New Delhi, Sept 17: | Updated: Sep 18 2003, 05:30am hrs
Bharat Petroleum Corporation Ltd (BPCL) has chalked out strategies to create non-cooking household demand for liquified petroleum gas (LPG). If the public sector giants pilot projects materialise, the domestic consumers would soon see LPG replacing electricity in geysers and fuel in gensets.

Speaking to FE, S Radhakrishnan, director (marketing), BPCL, said that the company had completed the first phase of feasibility for supplying LPG to gas-based Honda gensets.

We are also working to provide LPG to gas-based geysers from companies like Racold Appliances and Sphere Hot, added Mr Radhakrishnan.

The new strategy is clearly in prepration for the lifting of subsidies in the future - anywhere between 2005-07 which will encourage private players to participate in growing LPG market.

Traditionally, homes in India have been using LPG only for cooking needs but as new gas marketers come up with distribution channels catering to specific non-cooking needs, the scenario may undergo a radical change. Reliance group has already hinted at the possibilities of supplying gas for refrigeration and air-conditioning.

Mr Radhakrishnan said that BPCLs current LPG focus was only on geysers and gensets and not air-conditioning.

Gensets, which run on kerosine or diesel, are quite polluting as they release tar and thick smoke unlike LPG fuel, Mr Radhakrishnan.

In the West, gas is widely used in running geysers and we expect the same to happen here as we create (niche) marketing and distribution channels to serve (energy-consuming) appliances.

Currently, LPG from three public sector oil companies BPCL, IOC and HP account for nearly 95 per cent of domestic LPG sales. Also, between them, these companies absorb around Rs 400 crore a month towards subsidies.

Recently, a proposal has been mooted whereby all PSU oil companies would share the subsidy burden of the three LPG marketing companies.

BPCL feels that if the proposal were to be accepted, it would result in a 33 per cent cut in its Rs 100 crore a month loss.

Earlier, BPCL announced a customer loyalty programme Beyond LPG under which consumers can buy kitchenware from brands like Hawkins, Prestige and Nirlep at significant discounts from select Bharatgas distributors. Beginning with Delhi and north, the programme will be gradually rolled out across the country.

Speaking to FE, RK Singh, executive director (LPG), BPCL, said that the programme was aimed at retaining customers and increasing profitabiliy for distributors.

The increased contribution of consumer products could give profitability of 15 per cent per unit sale as compared to Rs 16 per cylinder of around Rs 250 (that is 6.4 per cent), said Mr Singh.

LPG division accounts for around 10 per cent of BPCLs overall petrochemical volume sales. With rural markets still to be tapped, Mr Singh sees the retail market growing at a rate of 10-12 per cent a year for the next five years.