Mumbai/New Delhi: India toppled Japan as the world’s second-largest importer of liquefied petroleum gas (LPG) as Prime Minister Narendra Modi’s pledge to provide cooking gas cylinders to the poor and wean them off polluting fuels, drove up consumption.
Imports of LPG, mostly used as cooking fuel, soared 23% during the financial year that ended 31 March to 11 million tonnes, according to data from oil ministry’s Petroleum Planning & Analysis Cell. Japan’s imports slipped 3.2% during the same period to 10.6 million tonnes, according to its finance ministry. China remains the world’s top importer.
Modi’s government in May 2016 embarked on a drive to provide free cooking gas connections to women from extremely poor households, aimed at reducing the use of polluting fuels such as wood and dried cow dung that, according to the World Health Organization, causes 1.3 million premature deaths in India every year. This push led to a record distribution of 32.5 million new cooking gas connections during the year.
“It’s a game changer,” said Ong Han Wee, who heads the LPG team at Singapore-based Facts Global Energy. “Never in history we have seen such huge LPG usage in India. LPG will remain main cooking fuel for India over next two decades.”
Free gas connections coupled with at least two other government programs have taken India’s active LPG user count to about 200 million, about 60% more than Japan’s entire population.
India aims to increase LPG usage to cover 80% of its households by March 2019, against 72.8% as on 1 April. Japan on the other hand is cutting back on LPG as cooking fuel and is moving to cheaper alternatives such as natural gas, according to Ong.
The target of adding 50 million new LPG users will boost demand for the fuel by 10% for the next two years, according to Nevyn Nah, oil product analyst at industry consultant Energy Aspects Ltd. “Thereafter, we have to see what India plans for future growth.”
India’s consumption of LPG during the year to 31 March was 21.55 million tonnes, registering a 9.8% growth from the previous year. Demand for the fuel may touch 35 million tonnes by 2031-32 due to increase in penetration of cooking gas connections in rural areas, oil minister Dharmendra Pradhan told Indian lawmakers last month.
According to estimates by the PPAC, India’s LPG consumption is expected to grow 9.7% in the current financial year that started 1 April to 23.7 million tonnes. Overseas purchases are poised to become the dominant source of the fuel in 2017-18, as consumption surpasses local production, according to an oil ministry official.
“A million tons a month LPG imports will soon be a reality,” said Facts Global’s Ong. “Impact of India’s growing LPG usage will become more visible on global markets over coming years.” Bloomberg