Contrary to the common perception that winters mean an increase in LPG consumption, November saw a decline in demand. The reason is simple — customers have become more cautious about usage.
Following the Government’s decision to restrict the supply of subsidised domestic LPG cylinders to six for each household annually, consumers were left with no option but to buy their remaining requirements at the market price.
Distributors say the reason for the decline in demand could be that consumers have become more careful in usage and diversion from consumer-to-consumer would have stopped. Consumer-to-consumer diversion means using a cooking gas cylinder to run vehicles, heaters, etc.
Acknowledging that restricting the number of cylinders had resulted in bringing down demand, R.S. Butola, Chairman, Indian Oil Corporation, said, “The trend is what we had seen in motor spirit (petrol), when it was deregulated. The growth had come down for petrol also.”
After the capping of cylinders (September 13, 2012) the growth in LPG consumption has declined, though in October it picked up year-on-year. In November, it dropped to 1.27 million tonnes from 1.33 million tonnes in the same month last year.
According to Government data, if sequential months of the current fiscal are considered, while in July and August the consumption stood at around 1.3 million tonnes, respectively, in September it dropped to 1.27 million tonnes. The demand rose in October to 1.3 million tonnes, but dropped in November to 1.2 million tonnes.
One reason why the demand rose in October was because the clarity on pricing post-capping came only around September 28, a distributor said, adding that the spill-over of September was seen in October. The distributor said October was one month when there was no backlog.
“While on the domestic side (14.2 kg cylinders), there is zero growth, in the commercial category (19 kg cylinders) the demand has gone up 25-30 per cent,” industry observers say.
Oil companies and distributors maintained that curbs on black-marketing were not the only reason for dip in demand. The stakeholders said consumers had become more cautious about LPG usage.
Asked whether they had come forward to book non-subsidised domestic LPG cylinders, distributors said by December 15, almost 95 per cent of the customers had exhausted their quota of six subsidised cylinders for the fiscal. This resulted in demand for non-subsidised 14.2- kg cylinders.
At present, a subsidised domestic LPG cylinder (14.2 kg) is sold at Rs 410.50 (Delhi); non-subsidised (14.2 kg) at Rs 895.50; non-subsidised for charitable institutions (14.2 kg) at Rs 1,156; and commercial LPG (19 kg) at Rs 1,619.