OMCs gear up to meet LPG bottling demand

The surge in demand for household liquefied petroleum gas (LPG) following the Pradhan Mantri Ujjwala Yojana (PMUY) has forced oil marketing companies (OMCs) to sweat their existing LPG infrastructure in the last fiscal year.

New LPG-related infrastructure additions are likely to happen in FY18 and FY19. Until then, OMCs will have to depend on increased number of shifts and technology upgrades.

For FY17, the packed domestic LPG consumption rose 10 per cent to 17.18 million tonnes per annum (mtpa) from 18.87 mtpa. In the same period, the bottling capacity of OMCs increased 7 per cent to 16.26 mtpa from 15.17 mtpa. This left a gap between the consumption and the available capacity. To plug this gap, OMCs are looking at shifts and technology upgrades.

“Indian Oil Corporation (IOC) added a capacity of 570,000 tonnes per annum at nine bottling plants in FY17 by augmentation of the bottling infrastructure in the existing plants with additional carousel (filling units) and additional shifts. Any deficit in the capacity shall be met with by stretching the capacity till Sunday and additional shift bottling. The firm is confident of meeting the demand,” a spokesperson for IOC said.

Despite a seven per cent rise in bottling capacity for OMCs, the number of bottling plants in the country remains unchanged. According to Petroleum Planning & Analysis Cell (PPAC) data, India had 189 bottling plants in April, a single plant more from what it had in April 2016. The addition, according to PPAC, was not made by the PSU firms.

“Demand is growing and we are aware of it. Infrastructure augmentation has been taken up on priority in the last year. Other measures include such as plants working in two shifts, adding more filling units have also been undertaken,” said an official from one of the three public sector OMCs.

However, industry analysts and company officials are hopeful the scenario would change. For instance, IOC plans to spend Rs 338 crore as capital expenditure for bottling plants to create the necessary infrastructure.

“With the PMUY scheme and the sudden push for increasing access to LPG, there has been a change in demand and the infrastructure planning for meeting them is underway. This infrastructure will come up in FY18 and FY19,” said Debasish Mishra, partner, Deloitte Touche Tohmatsu India.

“Some of the capacities are in the pipeline, while some are yet to be reported. OMCs are working in many ways to ensure the capacity rises to meet the demand,” the official quoted earlier said. 

There is a long-term plan for LPG bottling infrastructure. The petroleum ministry, earlier this month, shared plans to infuse Rs 25,000-30,000 crore in the infrastructure, including setting up of new bottling plants.

IOC, alone, plans to add approximately 800,000 tonnes per annum capacity each year till FY20.