Reliance Industries enters LPG retailing

LPG consumption is growing by over 10% and private refiners RIL and Essar Oil want a pie of it

Empty Liquefied Petroleum Gas (LPG) cylinders are seen at a gas distribution centre at Dujana village in Noida (Photo: Reuters)

Reliance Industries, operator of the world's biggest oil-refining complex, has forayed into cooking gas retailing, launching a 4-kg LPG cylinder on pilot basis.

Reliance Industries (RIL), operator of the world’s biggest oil-refining complex, has forayed into cooking gas retailing, launching 
a 4-kg liquefied petroleum gas (LPG) cylinder on pilot basis.

“Four-kg LPG cylinder launched in 4 districts on pilot basis,” RIL said in an investor presentation on second-quarter earnings.
LPG consumption is growing by 10 per cent and private refiners RIL and Essar Oil want a pie of it. Currently, public sector retailers Indian Oil, Bharat Petroleum and Hindustan Petroleum control the retail LPG market, selling cooking gas in 5 kg, 14.2 kg and 19 kg cylinders. 

They sell 12 cylinders of 14.2 kg or 34 bottles of 5 kg per year to households on subsidised rates and any requirement above that on market price. The 
19-kg cylinder is for commercial use.

Private firms are not entitled for government subsidy and they have to sell fuel at market price. But with the government restricting volume of subsidy as well as barring consumers earning more than ~10 lakh per annum from subsidised LPG, a readymade market is now available for private oil companies.

"Mobile App rolled in all operating states to enhance customer experience," RIL said in the presentation.

The company sells most of the LPG produced by its twin refineries at Jamnagar in Gujarat to public sector retailers.
While RIL did not disclose the price at which it is marketing the 4-kg cylinder, a 5-kg subsidised domestic LPG cylinder costs Rs 158.50 in Delhi. A 5-kg cylinder for domestic use is priced at Rs 181 while it costs Rs 252.50 for non-domestic use.

A subsidised 14.2-kg cylinder costs Rs 427 in Delhi and a non-subsidised bottle comes for Rs 490. A 19-kg cylinder is priced at Rs 895.

Domestic LPG consumption rose 10.8 per cent in April-September this year to 10.2 million tonnes, nearly half of which was imported.

The government had last year permitted RIL to sell up to 1.2 lakh tonnes of LPG produced at its plants to private cooking gas marketers.

The LPG Control Order mandates that all cooking gas (LPG) produced locally must be supplied to state-run fuel retailing companies as India is deficient in LPG and has to import a part of the requirement.

However, under the Parallel Marketing Scheme (PMS), private companies are allowed to import and market LPG to bulk consumers.

"Packed LPG Business sales grew at 10 per cent year-on-year basis," the company said in the presentation. On its aviation fuel business, RIL said ATF sales volume grew 31 per cent in second quarter and it has "leading market share at 10 out of 25 airports where it operates."