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MARKETING DIVISION
LPG MARKETING BY PUBLIC SECTOR OIL MARKETING COMPANIES (OMCs)
1.1 Four Public Sector Oil Marketing Companies (OMCs) viz., Indian Oil Corporation Limited, Bharat Petroleum Corporation Limited, Hindustan Petroleum Corporation Limited and IBP Co. Limited are engaged in marketing of LPG in the country. With increased availability of LPG, the number of LPG customers enrolled by them has also been increasing. The number of LPG customers served by them, as on 1.4.2005, was about 845 lakh through their network of 9,001 LPG distributors.
1.2 Consequent upon liquidation of LPG waiting list in urban areas and availability of new LPG connections across the counter, in existing markets throughout the country, OMCs had set the target for release of about 63 lakh new LPG connections during financial year 2004-05 with a thrust on smaller towns/rural areas which were hitherto virgin markets. OMCs have already commissioned 535 distributorships. During the year 2004-05, OMCs had released about 73 lakh new LPG connections and commissioned 675 LPG distributorships.
PSU Oil Companies had launched 5 Kg cylinders on 16th August 2002 at Shimla, Himachal Pradesh. Since then, scheme has been expanded to all other States as per demand of product.
Basic purpose for launching 5 Kg cylinder was that the small size LPG cylinder in the domestic sector will help in fulfilling the demand of low income groups in urban, semi-urban and rural pockets and also extend reach to hilly terrain and interior areas on account of convenience in transportation. The LPG connection with 5 Kg domestic cylinder in terms of deposit of Rs. 350/- per cylinder and low cost of refills costing approximately Rs. 110/- is affordable for the low income groups. This will also help in meeting the requirement of economically weaker sections of the society for LPG refills and help in restricting deforestation, ensuring a pollution free, happy and healthy environment.
During the year 2004-05, OMCs had released about 1 lakh number of 5 Kg connections in 27 States and 2 UTs. Total customers of 5 kg cylinders are about 2.42 lakh with OMCs as on 1.4.2005.
Government has permitted use of LPG, being a clean and environmentally friendly fuel, as an auto fuel. For this purpose, MOP&NG along with other concerned Ministries/departments has formulated necessary Legislative and Regulatory framework for safe usage of LPG as an automotive fuel.
Hon'ble Supreme Court has mandated conversion of old vehicles to LPG/CNG in cities which are equally or more polluted than Delhi like Ahmedabad, Agra, Bangalore, Chennai, Hyderabad, Kanpur, Kolkata, Lucknow, Mumbai, Pune, Surat and Sholapur.
Public Sector Oil Companies had initially identified 228 Locations for setting up of Auto LPG Dispensing Stations in various Metros and some other major cities. However, in view of directive of the Hon'ble Supreme Court to oil marketing companies are at present primarily concentrating on increasing their infrastructure in above mentioned cities. As on 1st January, 2005, OMCs have commissioned 99 ALDS in 16 cities and have planned another 60 ALDS to be commissioned in a phased manner.
Auto LPG pricing is market determined and there is no subsidy on Auto LPG. At present about 13 manufacturers of Conversion kits for 4 Wheeler vehicles and about 11 manufacturers of Conversion kits for 3 Wheeler vehicles have been approved by various Testing Agencies like ARAI Pune, VRDE Ahmednagar & IIP Dehradun.
In order to increase the availability of LPG and to foster competition, the private sector was allowed to participate in the scheme of parallel marketing of LPG in April 1993- by decanalising imports of LPG. Under the scheme, a private party can undertake import of LPG after obtaining a rating certificate from one of the approved rating agencies given in the LPG (Regulation of Supply and Distribution) Order, 2000. Under PMS LPG is to be sold at market-determined prices by the private parties. LPG imports during 2004-05 have been about 265.3 TMT against about 216.3 TMT during the last year.
Recently Government have authorized ONGC, GAIL & RIL to market their seasonally surplus LPG through parallel marketing system or directly. Likewise, Government have authorised RIL and MRPL to sell SKO directly at market price, after meeting PDS requirement projected by OMCs.
As a consequence of dismantling the APM & allowing competition, Government have granted the authorisation to market transportation fuels in favour of new entrants namely ; Oil and Natural Gas Corporation Limited (ONGC), Mangalore Refinery and Petrochemicals Limited (MRPL) & Numaligarh Refinery Limited (NRL) (All Public Sector Oil Companies) and M/s. Reliance Petroleum Limited(RIL), M/s. Essar Oil Limited(EOL) and M/s. Shell India Pvt. Ltd (SIMPL).
The details of the Retail Outlets being set up by new entrants is as under :
| Name of Company | Number of Retail Outlets | Commissioned as on date.(17.2.2004) |
| ONGC | 1,100 | Nil |
| NRL | 510 | 04 |
| RIL | 5,849 | 243 |
| EOL | 1,700 | 153 |
| MRPL | 500 | Nil |
| SIMPL | 2,000 | Nil |
| Total | 11,659 | 400 |
The Retail Outlets would be set up by these companies as per their commercial considerations subject to the condition that they would set up at least 5.6% of the retail outlets in remote areas and at least 5.3% of their retails outlets in low service areas. Further they would abide by other marketing service obligations and retail service obligations as notified by the Government from time to time.