New Delhi: The Union government has shortened the booking period for domestic cooking gas cylinders to 25 days, cutting down from the earlier 45-day rule. The longer booking cycle was introduced in March after the war in West Asia disrupted supplies. While the region accounted for 90% of India's total liquefied petroleum gas (LPG) imports, India is increasing its LPG imports from the US, which now accounts for 60% of India’s cooking gas imports of 33 million tonnes valued at $11 billion. Also, Algeria and Angola are the other new sources of LPG. Domestic production has also ramped up, helping ease supply woes, with the government setting LPG production targets for all refiners last month. Mint explains why LPG supplies have eased for India, the world’s second-largest buyer of cooking gas that imports up to 65% of its annual requirement. The development is significant for the country’s 340 million LPG consumers.
Why has the government eased the norms for LPG booking in rural areas?
The relaxation in the booking timeline comes amid increasing and continuous supplies for alternative sources, largely from the US. During March-August, after the start of the war, the share of US LPG in India's import basket for the fuel stood at over 50%, according to data from the commodity and ship-tracking firm Kpler. It was less than 10% before the war erupted. Further, Indian refiners increased their LPG production to meet domestic demand. Recently, for the first time, the Centre set cooking gas production targets for refineries in the country. The petroleum ministry specified maximum LPG production levels for 21 refineries and upstream companies, with a combined production potential of 63,810 tonnes per day.
What is the current composition of India's LPG import basket?
In the past few months, the US has emerged as the largest supplier of LPG to India. In November, Indian refiners signed a term contract with US suppliers for sourcing 10% of overall cooking gas imports. However, amid the global supply shortage and a lack of supplies from traditional sources in West Asia, spot purchases from the US increased. Further, imports from other new sources, including Algeria, have also increased. In August, Algeria was the third largest supplier to India. UAE was the second-largest supplier, with exports shipped through ports east of the Strait of Hormuz. Earlier, the Gulf countries, including Qatar, Saudi Arabia and UAE, accounted for 90% of India's total LPG imports.
What has been the trend of domestic LPG production this year?
LPG production has witnessed significant growth this year. During the April-July period of the ongoing fiscal (FY27), domestic LPG production was 5.47 million tonnes, 28.3% higher than 4.26 million tonnes in the year-ago period. This increase in production was driven by a government directive to all refiners and petrochemical complexes in the country to maximise LPG production by diverting streams of propane, butane, propylene, and butenes from other petrochemicals and downstream products into the LPG pool. These curbs, however, have been eased.
How does the government plan to reduce import dependence for LPG and ensure energy security?
Along with increasing domestic LPG production, the government is also working to divert fuel demand to other cooking sources. Last month, the petroleum ministry approved an incentive scheme to promote domestic piped natural gas (PNG) connections. Under the scheme, eligible city gas distribution companies will be allocated an additional supply of cheaper, locally produced gas for each additional billed domestic PNG connection. Further, all LPG consumers with PNG infrastructure in their vicinity have been asked to switch to piped gas supplies. The government is also working on a programme to promote the use of induction cookstoves in the country.