New Delhi: India can become the largest market for LPG in the next 10 years i.e. by 2030, beating China. Research and consulting company Wood McKinsey, in a report released on Tuesday, claimed that the increase in liquefied petroleum gas (LPG) demand in households would continue unabated.
It is estimated to reach 3.3 million tonnes by 2030, with an annual cumulative increase of 3.3 percent. In view of health and environmental hazards, the government is also promoting LPG instead of biomass (wood, dung fuel) in the country. The government is providing subsidy on LPG to the lower income group through Direct Benefit Transfer (DBT).
Free LPG stoves are being provided under the Pradhan Mantri Ujjwala Yojana for families living below the poverty line. LPG coverage has reached 98 percent nationwide, which is 42 percent higher than in 2014. But its use is still less. Cylinders are not filled annually at the rate at which new connections are being given.
Average consumption remains below the standard 12 cylinder. Despite subsidies and initially providing LPG stoves for free, LPG remains costlier than biomass. Qiirling Chen, a research analyst at Wood McKinsey, said, "Assuming that the government continuously subsidizes LPG used in households for a whole decade, it could reach $ 5.7 billion annually by 2030."
Currently, China is the largest LPG demand center in the world for the residential sector. McKinsey said that the lack of infrastructure, however, hindered the delivery of cooking gas through pipes to small towns. Also, retail PNG prices remain expensive as compared to discounted rates of LPG.
This makes PNG a less attractive option than TLPG before 2030. If the government continuously subsidizes LPG used in homes for a whole decade, by that time it will overtake China as the world's largest market for the residential sector.
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