Project report for The LPG Distribution Industry

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Liquefied Petroleum Gas (LPG) is a gaseous fuel made mostly of butane or propane that is obtained during petroleum refining. Fossil coal can also be used to make LPG. LPG is non-toxic, simple to treat, energy-efficient, and clean-burning. LPG stoves are extremely useful for consumers because they heat up easily and allow for precise temperature control. However, because of the higher initial expenditure and ongoing fuel prices, LPG stoves are mostly used by middle- and high-income classes in urban areas. LPG supply in rural areas can be intermittent if it is available at all. Less wealthy households are more likely to use LPG as a minor part of their energy mix, particularly when smaller quantities of food need to be heated quickly, such as at breakfast.

The key advantage of LPG is that its stove efficiency, which is about 55-60%, is considerably higher than that of many other stoves. The LPG distribution lexicon is really eminent from both economy’s as well as environmental point of view. The Government of India provides LPG to domestic households through the three state-owned Indian LPG marketers: Indian Oil Corporation Limited (IOC), Hindustan Petroleum Corporation Limited (HPLC), and Bharat Petroleum Corporation Limited (BPCL). Supplies are made available to consumers through a wide distribution network of Indian LPG marketers. Before the current package of reforms was instituted, LPG cylinders for domestic use were sold at heavily subsidized rates in 14.2 Kg and 5kg cylinders.

Indian Oil Corporation Ltd. (IOCL), Hindustan Petroleum Corporation Ltd. (HPCL), Bharat Petroleum Corporation Ltd. (BPCL), Mangalore Refinery and Petrochemicals Ltd. (MRPL), Reliance Industries Ltd. (RIL), and others are among the main players in the Indian Liquefied Petroleum Gas industry. In order to increase LPG supply in rural areas of the country, the Ministry of Petroleum and Natural Gas has released new guidelines and regulations for the selection of LPG distributorship.

Market potential & Strategy

Demand for liquefied petroleum gas in India rose at a Compound annual growth rate of 2.67 percent from 2013 to 2019 and is expected to continue to grow at a healthy rate during the forecast period. Increased use of Liquefied Petroleum Gas as a residential fuel, industrial fuel, transportation fuel, and safe cooking fuel is expected to boost demand in India. Due to the ongoing recession in the Indian economy, the government is focusing its resources on infusing capital and revising GST rates for the worst-affected industries, such as Feedstock and others.

Furthermore, as a result of government policies, demand for clean cooking fuel in rural residential areas is projected to rise in the coming years, leading to the development of the country's Liquefied Petroleum Gas industry. Furthermore, owing to the downturn in the automotive industry, demand for Liquefied Petroleum Gas would be lower than average, but with the government's corrective steps, demand for Liquefied Petroleum Gas is expected to rebound in the coming quarters.

Besides that, the rapid growth of Liquefied Petroleum Gas production capacity, newly allocated refinery expansion programs, and new pipelines laid across cities in both the North and South regions, combined with the substantial demand for LPG, is emerging as a big go that will help augment the India Liquefied Petroleum Gas market through 2030. The government plans to enlarge a number of its petrochemical plants as well as lay new pipelines in a few states. India's market share is expected to grow more by 2030, as it is one of the leading producers and traders of LPG. The LPG distribution industry may be unjust from an economic perspective yet, is recession-free and very less elastic to the spiking prices, being a rudimentary need.

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