For Appu, Chhotu and Munna, the wait at the gas dealership has gotten longer.
Demand for these portable gas cylinders creatively named after kids plunged after prices doubled following the West Asia war, at least four distributors said. These 5kg cylinders are primarily used by migrant workers and students, and can be purchased off the shelf with just Aadhar as identity proof. The crash in demand also raises questions about workers' return to urban areas, after an exodus during a cooking gas squeeze.
The fall in demand coincided with price hikes. In Delhi, the price of these small cylinders—technically called free trade LPG (FTL) cylinders—jumped from ₹323 in March to ₹821.50 in June. FTL cylinders are sold by oil marketing companies under the brand names Chhotu and Munna (IndianOil), Bharatgas Mini (BPCL), and HP Gas Appu (HPCL).
No returns
"FTL demand was high right after the crisis began, but now, people are not returning to refill their cylinders, mostly since May. There has been about an 80% decline in demand for FTL cylinders across the country, in some cases even 90%," said a Delhi-based LPG distributor, one of the four people cited above.
An FTL cylinder is a portable cooking gas canister sold, requiring only an Aadhar verification for purchase. It comes in handy 2kg and 5kg sizes, making it perfect for students, migrant workers, and people who move frequently. It is categorized as commercial LPG, and comes without subsidies. Oil marketing companies (OMCs) increased the availability of 5kg cylinders amid the war.
On Wednesday, state-run oil OMCs lowered commercial cylinder prices, and consequently, FTL cylinders will now sell in Delhi at around ₹805.50. However, LPG distributors said the price of an FTL cylinder for a new connection has been raised by around ₹160 with effect from Wednesday. A new FTL cylinder connection in Delhi now costs ₹1,929.50, compared with ₹1,765.50 in June.
Significant decline
Ranjit Singh, manager at an LPG distributorship said, “There has been a significant decline in both new cylinder sales and FTL refills in recent weeks. His agency has seen a decline of 40%.
The development assumes significance given that around 2 million 5kg FTL cylinders were sold during 23 March to 22 April. The country currently has a total of 340 million household LPG consumers. To be sure, after halting commercial LPG supplies in early March amid a global supply shortage, the government allowed the sale of FTL cylinders for migrant workers with effect from 23 March.
On 18 June, the petroleum ministry officials had said that about 198,000 FTL cylinders were sold over the previous three days. Further, in order to increase availability of these cylinders, the government and OMCs have also been organizing dedicated camps, and on 18 June the ministry said that in the previous three days, over 19,100 FTL cylinders were sold through 1,334 camps.
Jagdish Raj, president of Uttar Pradesh Circle of the All-India LPG Distribution Federation said, “The whole objective of promoting FTL cylinders among migrant workers is defeated because of the steep hike in prices. We do not get any customer for refilling now, as FTL is now more expensive than 19kg commercial cylinders if we look in terms of per kg."
An LPG distributor in Thiruvananthapuram, said there are no new FTL sales at his agency, and that refills are down over 20%.
“Availability is not an issue now. Also, the fact that small cylinders is available at select petrol pumps may also impact the demand at LPG agencies," the distributor said.
A 19kg commercial cylinder in Delhi now costs around ₹2,930, down from ₹3,113.50 in June. That means ₹154.2 per kg, while the same gas costs ₹161.1 per kg in FTL.
Queries emailed to the spokespersons of the petroleum and natural gas ministry, Indian Oil Corp. Ltd, Bharat Petroleum Corp. Ltd and Hindustan Petroleum Corp. Ltd on remained unanswered.
Migrant factor
A key factor for the demand drop is the return of migrant workers—industrial workers, street food vendors, workers in restaurants and vegetable sellers—to their home towns.
S. Irudaya Rajan, chairman, International Institute for Migration and Development, said the fuel crisis and the surge in prices impacted every section of the society, including migrants.
"With the closure of businesses, shops and other commercial entities due to the war and supply issues, people lost their jobs. Everybody has loans to pay, everyone was impacted. So, they had to leave. One of the instances is Kerala, which witnessed migration of workers and labourers back to their native places during the war," Rajan said.
Scarcity and high prices of gas also impacted businesses dependent on the fuel, with several small business including restaurants and eateries shutting shop.
Ludhiana-based industrialist and the president of the Federation of Punjab Small Industries Associations (FOPSIA) Badish Jindal noted that workers who left during wartime have now started coming back.
“In Ludhiana, nearly 85-90% of industrial workers have returned to work. However, access to LPG cylinder refills remains a major challenge. Since most of these workers are migrants, many are forced to rely on unauthorized refill channels, where they end up paying between ₹3,500 and ₹4,000 per 19kg cylinder,” said Jindal.
Mint earlier reported about state-run OMCs halting new cooking gas connections nationwide amid a supply shortage linked to the West Asia conflict and the closure of the Strait of Hormuz.