Government-owned oil marketing companies are likely to reduce imports of liquefied petroleum gas (LPG) after the country’s consumption slumped 3 per cent in November because of a recently-introduced cap on subsidised cooking gas cylinders, officials and industry executives said.
The fall in consumption is contrary to industry expectations that projected a growth of 10.63 per cent.
A source in Indian Oil Corporation (IOC) said that the consumption growth of domestic LPG in November is negative as diversion of subsidised cooking gas has completely stopped in the past three months.
Industry executives said LPG inventories at IOC, Bharat Petroleum Corporation and Hindustan Petroleum Corporation—the three state-run oil marketing firms—have swelled from about 8 days to 15 days. In September, the government had announced a sharp hike in diesel prices and put a cap of six subsidised cylinders per household per year in an effort to check the uncomfortably high oil subsidy bill and cut losses of state-run oil firms.
Consumers can, however, buy more than the entitled cylinders by paying the market price, which is significantly higher. Certainly, limiting the number of subsidised cylinders and KYC (know your customer) requirements have helped in reducing diversion as consumers keep strict vigil on their six cylinders entitlement.
Consumption has also come down because consumers are now economising use of subsidised gas. They know once six cylinders are exhausted, they have to pay additional Rs 485 for each cylinder, the IOC source said.
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