Private entities to enter LPG market? Big plans to liberalise government policies

The central government may soon allow private companies to sell subsidised liquefied petroleum gas (LPG) in India, a move which could potentially break the monopoly of the state-owned oil marketing companies in the domestic cooking gas segment.

According to a media report, the Ministry of Petroleum and Natural Gas has set up a five-member committee to review the existing framework of LPG marketing in India and identify the grey areas that might allow private entities like Reliance Industries to sell subsidised cooking gas.

The expert panel was constituted on May 30, which includes economist Kirit Parikh, former petroleum secretary GC Chaturvedi, ex Indian Oil chairman MA Pathan, IIM Ahmedabad director Errol D'souza, and a joint secretary in the petroleum ministry.

The panel, headed by Kirit Parikh, will also look into the issues related to definition or quality standards of the LPG available in the market and will submit its report by July-end, according to the Economic Times report.

Report suggests that the committee will be discussing the matter with various stakeholders and will assess the need, if any, to liberalise government policies to increase the participation of private sector in LPG marketing in the country.  

It is noteworthy that Mukesh Ambani-led Reliance Industries, which is a big producer of LPG, has been pushing to get into the cooking gas market in India. The oil and gas major has already written to the government, seeking permission to enter subsidised domestic LPG distribution, starting with the cities.

According to ET, RIL currently has a cooking gas distribution base of about 10 lakh consumers to whom it supplies non-subsidised cylinders, mostly in Gujarat and Maharashtra. This figure is very small as compared to India's customer base of 2.65 crore. India, which is the world's second-largest LPG consumer, reportedly consumed 24.9 million metric tonnes of LPG in 2018-19.

There has been surge in cooking gas customer in the country after the Prime Minister Narendra Modi launched Pradhan Mantri Ujjwala Yojana (PMUY) in May 2016 to provide clean cooking fuel to poor families, especially in rural India. India is home to more than 24 crore households out of which about 10 crore households are still deprived of LPG as cooking fuel and have to rely on firewood, coal, dung - cakes etc. as primary source of cooking.

Edited by Chitranjan Kumar

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