Rural Demand In India
Satisfying Enormous Growth Potential
7th to 9th October-2009, Rio de Janerio, Brazil
Presentation by:
Apurva Chandra,
Joint Secretary(Marketing)
Ministry of Petroleum and Natural Gas,
Government of India
LPG Market- Uniqueness of India
•
Second largest packed LPG market in the world
•
LPG in cylinders, home delivered to more than 108
million households.
•
Customer population increasing by 6 million each year.
•
For better affordability product is subsidized.
•
For better logistics by packaging
near to market, bottling plants
even at remotest corners• At Leh highest altitude,
• At Andamans
the island situated in Bay of Bengal.
•
•
Deployed Latest Technology for
Storage- Cavern
LPG- History & Background
• LPG Marketing Commenced in
India in 1955
– Started by Burmah Shell in Mumbai
– Public Sector Oil Company , Indian
Oil Commenced Operation of LPG
Marketing in 1965 at Kolkatta and
Patna
• Product availability improved from
1998
– Customer strength grew from 20M
to 100M in a decade
– Sales jumped from 1241TMT in
1985 to 11400 TMT in 2008
– Currently catering to more than
50% of Indian population.
120
Customer growth rate(in millions)
1985-2009
101.7
100
84.5
80
60
47.4
40
20
10.6
23.2
16.2
0
1985
12000
1990
1995
2000
2005
2008
2009
Sales in TMT
1985-2009
11339
9979
10000
8000
6000
• Growth poised more towards rural
markets
107.8
5902
4000
3850
2414
2000
1241
0
1985
1990
1995
2000
2005
2008
Various Products Marketed in LPG
•
•
•
•
Domestic LPG
– Packed product in 14.2Kg, &
5kg cylinders, home delivered
through distributors
Non Domestic LPG
– Packed product 19Kg and 47.5
kg delivered supply through
distributors.
Bulk
– Delivered to Storage Tanks of
Customers- Business
Associates to garner
Customers
Auto LPG
– Through Retail Outlets along
with MS/Diesel and/or stand
alone outlets
Share of Products
IND BULK
2%
AUTO LPG
2%
PACKED
NDNE
NON
DOMESTIC
5%
IND BULK
AUTO LPG
PACKED
DOMESTIC
91%
Domestic LPG Business Overview
•
•
•
•
Total Customer Strength
: 108 M
Average Enrolment (current) : 6 M Yearly
Daily Bottling
: 2.4 million
Bottling Plants
:
190
Refineries, Gas Processing
Plants & Imports
190 Bottling Plants
9382Distributors
108 million Customers
LPG Marketing Overview
Consumption Pattern - LPG
– There is steady growth in LPG consumption in the last 4
years.
12000
11332
(7.6%)
11500
10531
(5.5%)
11000
10500
10052
10000
9500
9000
Domestic LPG
.
11778
(4%)
(Figs. In TMT)
2005-06
2006-07
2007-08
2008-09
Domestic LPG Penetration
Urban
Without
LPG
13%
Urban- Rural
Population
Urban
28%
With LPG
87%
Rural
72%
Slice 4
5
0%
Above
5000
3%
below
2000
83%
3%
14%
83%
between
2000
and
5000
14%
Population wise
Division- Rural
With LPG
17%
Without
LPG
83%
Rural
LPG Penetration- Issues in
Rural Areas
 Most of Rural Households
natural biomass or kerosene
Biomass based fuels lead to health
hazards and pollution
 Use of Kerosene by the households
at a subsidised rate.
 Per Capita Income of rural areas- affordability
 Viability of distribution cost as rural households are
scattered.
Potential Available in Rural Area- more than 50 million
Vision 2015- Govt.’s Thrust on LPG in Rural
Areas
•
To enroll total of 55 m new
LPG connections by 2015
•
8.5 million every year
•
Mostly in Rural areas
•
Through existing
distributors and Small
Format Distributors
•
Conversion of Kerosene
customers
Strategies for Rural Market- Penetration
Models to improve reach
•Through existing Distribution network
• By Expanding Existing model of Distributor Network
• Low Cost , Self Employment based LPG distributors as a
viable model
•Community Kitchen
Strategies to improve affordability
• Continue to give Favorable relative price
• Access Subsidization
• For economically Backward
• By State Governments
• Oil Marketing Companies• Corporate Social Responsibility
•Conversion of Kerosene
Model based on Viability
Low Cost, Self Employment Rural Model
• Gramin LPG Vitrak (GLV) meaning Rural LPG Distributor
• GLV sustainable for cluster of villages having about 4500 families.
– 40 % population villagers may go for LPG.
Scheme to improve Viability
– 1800 consumers required for sale of 600 cylinders of 14.2 kg per
month.
• Per Capita 5Kg per month
– Proprietor himself to operate with the help of 1 staff
• Option for part time job
– Smaller Godown and showroom located close by
– Cylinders will be sold on cash and carry basis
– Distributorship to those who are in possession of requisite land at
advertised location
Community Kitchen
• Scheme introduced in 2003-04
for Community Kitchens in
Hospitals, Mid day meal
scheme etc.
• Model extended to areas below
viability of distributorships and
for villagers with low
purchasing power.
• Kitchen to be set up by nearest
distributor.
• Utensils and stoves through
Marketing Companies/State
Government.
• Villagers to use facility on user fee
basis.
• Care taker by Village
officials/Distributor.
Supply Demand Balance
Historical
15000
• LPG Demand Projections
TMT
• Expected – CAGR 8%
• Asia Pacific – CAGR 6%
Demand
12000
9000
Indigenous Production
6000
3000
• LPG Supply Outlook
Import
0
2005-06
2006-07
Projection
expanded and 3 new
Refineries being
commissioned.
•Two import facilities Kochi &
Chennai 1400TMTPA
18000
Demand
15000
12000
TMT
Imports to continue
2008-09
Year
•Existing Refineries being
•However, dependence on
2007-08
Indigenous Production
9000
6000
Import
3000
0
2009-10
2010-11
2011-12
2012-13
Year
2013-14
2014-15
LPG Infrastructure
Jalandhar
Panipat
Bhatinda
Delhi
Loni
Digboi
Ajmer
Kanpur
Guwahati
Barauni Kolkatta
Kandla
Existing Pipelines
Proposed Pipelines
Jamnagar
Haldia
Hazira
Mumbai
High
Mumbai
Secunderabad
Paradip
Vizag
Vijayawada
Mangalore
Kochi
Chennai
Facility
Existing
Plan/Under
Construction
Refinery
19
3
Gas Plants
10
-
Import
4(3500TMT)
2(1400TMT)
Bottling
Plants
189
13
2182 KM
1000 KM
Pipelines
LPG Infrastructure / Logistics
Modes of Transportation :
LPG Pipelines
30%
Road Movement
58%
Railway Wagons
12%
Pipeline contribution upto 35% by 2015
Investment Planned Till 2015
Facility
Import Facility
Numbers/
Capacity
2 (1400
TMTPA)
Investment
Million USD
140
14.3 TMT
50
Tankage
Traditional/Mounded
Cavern 0.1 MMTPA
110
Pipelines
Planned
1000km
515
Investment Planned till 2015
Facility
Numbers /
Capacity
Investment
Million
USD
Bottling Plants
Under Construction 2 X 44 TMTPA
10
Planned 6 x 44 TMTPA
40
Filing Equipments
Augmentation
Equipments ( Cylinders
& Regulators)
Total
900 TMTPA
20
65 million
1560
2445
Conclusion
• In India, LPG is the most sought after fuel for domestic use.
• Government of India has developed a Vision 2015 document for
increasing use of LPG in India.
• The Vision 2015 document is focused to improve customer
Service and availability of LPG.
• Government of India is committed to increase the penetration
of LPG in Rural India by providing LPG at affordable price.
• As a commitment to Environment, Government of India is also
committed to replace kerosene by LPG at the earliest.
Thank You
Domestic LPG Penetration
Urban
Rural
Total
Population March 2009
in Million
326.2
838.8
1165
Households in Million
93.1
156
249
LPG connections in
Million
81.2
26.8
108
Penetration
85%
17%
42%
Per capita
consumption (Kg/year)
128
83
117
Source : NCAER
Huge Potential Available in Rural Area
Indian LPG Scenario
Source: PPAC/Industry Figures
Sources of Bulk LPG
IN MMT
Demand & Production 2004-09
14
12
10
8
6
4
2
0
10.0
7.7
7.6
2004-05
2005-06
11.8
11.3
10.5
10.1
8.4
8.9
9.3
2006-07
2007-08
2008-09
Demand
Production
Import Growth (TMT)
Source Countries
3000
2453
2500
2217
2000
1500
2583
2592
1981
1491
1000
865
500
0
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09