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Auto LPG sales pick up

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Auto LPG segment of oil companies has seen significant growth since September 2012 owing to the cap on subsidised LPG cylinders.

IndianOil Corporation (IOCL) for instance saw a growth of around 22% in volumes and nearly 2% in its market share. It traded nearly 10,517 million tonnes of AutoGas in December 2012 against 8,593 million tonnes of AutoGas traded in September 2012.

Bharat Petroleum Corporation and Hindustan Petroleum Corporation on the other hand saw a nearly 13% jump each in the volumes while losing market share by 1% respectively.

BPCL traded 4,490 million tonnes of Auto LPG in December 2012 against 3,986 million tonnes in September and HPCL traded 4,788 million tonnes of Auto LPG in December 2012 against 4,239 million tonnes in September 2012.

“The cap on subsidized LPG cylinders pushed the demand of AutoGas. This however, is despite the increase in Auto LPG prices,” said N Srikumar, Executive Director, Corporate Communication and Branding, IOCL.

Between September and December 2012, AugoGas prices have gone up nearly 17% from Rs 41.08 to Rs 47.92 per litre in Delhi. In Mumbai, the same has registered an almost 16% growth, up from Rs 45.08 to Rs 52.28 per litre between September and December 2012.

Oil companies say the upswing in Auto LPG growth augurs well for both the consumer as well as for the oil company, as Auto LPG is a more economical fuel than regular petrol, and its price is also market driven without any under recoveries incurred by oil companies.

While IOC with its nearly 52% market share in the Autogas segment has a network of 350 outlets, BPCL has around 91 outlets and HPCL has around 217 outlets.

 

Company Volumes (mn tonnes) % increase   Sept'12 Dec'12   IOCL 8,593 10,517 22 BPCL 3,986 4,490 13 HPCL 4,239 4,788 13

 

These companies however, have, over the last one year, not increased their Atuo LPG outlets. 

Network expansion of Auto LPG however, say these companies, is a major concern for them given the space constraint at the regular fuel retail outlets and stringent  explosive regulation  norms that need to be adhered to.

“Stand alone Auto LPG facilities  too will be difficult to justify  Return on investments, given the huge investments required in both land and Auto LPG infrastructure costs,” says Srikumar.

Capping of LPG has also controlled diversion of LPG cylinders to non-cooking use like in automobiles, commercial use etc  has slowed down considerably. 

While earlier, demand for domestic LPG clocked double digit growth, today the number is down to single digit and even negative numbers in some markets. 

According to Petroleum Planning and Analysis Cell (PPAC) of the petroleum ministry, LPG consumption  grew at 9.1% in FY11.