003 Apurva Chandra

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003 Apurva Chandra Powered By Docstoc
					    Rural Demand In India
Satisfying Enormous Growth Potential
   7th to 9th October-2009, Rio de Janerio, Brazil

                       Presentation by:
                      Apurva Chandra,
                   Joint Secretary(Marketing)
             Ministry of Petroleum and Natural Gas,
                      Government of India
        LPG Market- Uniqueness of India
•   Second largest packed LPG market in the world
•   LPG in cylinders, home delivered to more than 108
    million households.
•   Customer population increasing by 6 million each year.
•   For better affordability product is subsidized.
•   For better logistics by packaging
    near to market, bottling plants
    even at remotest corners-
    • At Leh highest altitude,
    • At Andamans
      the island situated in Bay of Bengal.
•   Deployed Latest Technology for
•   Storage- Cavern
              LPG- History & Background
• LPG Marketing Commenced in                    Customer growth rate(in millions)
  India in 1955                           120   1985-2009
   – Started by Burmah Shell in Mumbai    100                                                       101.7
                                                                                                             107.8

   – Public Sector Oil Company , Indian    80
                                                                                          84.5
     Oil Commenced Operation of LPG
     Marketing in 1965 at Kolkatta and     60
                                                                                 47.4
     Patna                                 40

                                                                       23.2
• Product availability improved from       20
                                                    10.6
                                                            16.2
  1998                                      0
                                                 1985    1990      1995     2000      2005       2008     2009
   – Customer strength grew from 20M
     to 100M in a decade                                   Sales in TMT
   – Sales jumped from 1241TMT in                12000
                                                           1985-2009
                                                                                                        11339
     1985 to 11400 TMT in 2008                   10000                                       9979
   – Currently catering to more than
                                                  8000
     50% of Indian population.
                                                  6000                                5902
• Growth poised more towards rural                4000                        3850
  markets                                         2000
                                                                    2414
                                                            1241
                                                     0
                                                         1985   1990      1995     2000   2005     2008
      Various Products Marketed in LPG
                                           Share of Products
•   Domestic LPG
     – Packed product in 14.2Kg, &
       5kg cylinders, home delivered
       through distributors                                AUTO LPG
                                           IND BULK           2%
•   Non Domestic LPG
                                              2%
     – Packed product 19Kg and 47.5                                        PACKED
       kg delivered supply through
       distributors.                                                       NDNE
                                         NON
•   Bulk                                                                   IND BULK
                                       DOMESTIC
     – Delivered to Storage Tanks of                                       AUTO LPG
       Customers- Business                5%
       Associates to garner                                      PACKED
       Customers                                                DOMESTIC
•   Auto LPG                                                       91%
     – Through Retail Outlets along
       with MS/Diesel and/or stand
       alone outlets
     Domestic LPG Business Overview
•   Total Customer Strength     : 108 M
•   Average Enrolment (current) : 6 M Yearly
•   Daily Bottling              : 2.4 million
•   Bottling Plants             :    190

     Refineries, Gas Processing
          Plants & Imports

        190 Bottling Plants


          9382Distributors

       108 million Customers
          LPG Marketing Overview
               Consumption Pattern - LPG


– There is steady growth in LPG consumption in the last 4
  years.
                                           11778
 12000                                      (4%)   (Figs. In TMT)
                                  11332
                                  (7.6%)
 11500
                         10531
 11000                                                   2005-06
                         (5.5%)
 10500           10052                                   2006-07
 10000                                                   2007-08
                                                         2008-09
   9500
   9000
                     Domestic LPG


                 .
          Domestic LPG Penetration
                                          Without          Urban
Urban- Rural                               LPG
                                           13%
Population
                        Urban
                         28%                    With LPG
                                                  87%


               Rural
                72%

           Slice 5
                 4
                                                    With LPG
                                                               Rural
             0%
                       between                        17%
  Above
   5000                  2000
    3%                   and
          3%     14%     5000
                                              Without
                         14%
                                               LPG
                                               83%
                        Population wise
 below
          83%
 2000
  83%
                        Division- Rural
             LPG Penetration- Issues in
                   Rural Areas
 Most of Rural Households
  natural biomass or kerosene
  Biomass based fuels lead to health
  hazards and pollution
 Use of Kerosene by the households
  at a subsidised rate.
 Per Capita Income of rural areas- affordability
 Viability of distribution cost as rural households are
  scattered.


   Potential Available in Rural Area- more than 50 million
    Vision 2015- Govt.’s Thrust on LPG in Rural
                       Areas
•    To enroll total of 55 m new
     LPG connections by 2015
•    8.5 million every year
•    Mostly in Rural areas
•    Through existing
     distributors and Small
     Format Distributors
•    Conversion of Kerosene
     customers
  Strategies for Rural Market- Penetration
 Models to improve reach
 •Through existing Distribution network
 • By Expanding Existing model of Distributor Network
 • Low Cost , Self Employment based LPG distributors as a
   viable model
 •Community Kitchen
Strategies to improve affordability
• Continue to give Favorable relative price
• Access Subsidization
    • For economically Backward
        • By State Governments
        • Oil Marketing Companies-
            • Corporate Social Responsibility
•Conversion of Kerosene
                        Model based on Viability
Low Cost, Self Employment Rural Model
• Gramin LPG Vitrak (GLV) meaning Rural LPG Distributor

• GLV sustainable for cluster of villages having about 4500 families.
   – 40 % population villagers may go for LPG.

Scheme to improve Viability
   – 1800 consumers required for sale of 600 cylinders of 14.2 kg per
     month.
       • Per Capita 5Kg per month

   – Proprietor himself to operate with the help of 1 staff
       • Option for part time job
   – Smaller Godown and showroom located close by
   – Cylinders will be sold on cash and carry basis
   – Distributorship to those who are in possession of requisite land at
     advertised location
                  Community Kitchen
                                      • Kitchen to be set up by nearest
                                        distributor.
                                      • Utensils and stoves through
                                        Marketing Companies/State
                                        Government.
                                      • Villagers to use facility on user fee
                                        basis.
                                      • Care taker by Village
                                        officials/Distributor.
• Scheme introduced in 2003-04
  for Community Kitchens in
  Hospitals, Mid day meal
  scheme etc.
• Model extended to areas below
  viability of distributorships and
  for villagers with low
  purchasing power.
              Supply Demand Balance
                                                                         Historical
                                          15000

                                                                                         Demand
• LPG Demand Projections
                                          12000


                                          9000

   • Expected – CAGR 8%




                                    TMT
                                          6000
                                                                        Indigenous Production

   • Asia Pacific – CAGR 6%               3000

                                                                                          Import
• LPG Supply Outlook
                                             0
                                                    2005-06             2006-07          2007-08             2008-09
                                                                                  Year

   •Existing Refineries being
   expanded and 3 new                                                     Projection
   Refineries being                       18000
                                                                                         Demand
   commissioned.                          15000


   •However, dependence on
                                          12000
                                    TMT
                                                                        Indigenous Production
                                           9000
   Imports to continue
                                           6000

   •Two import facilities Kochi &          3000
                                                                                          Import
   Chennai 1400TMTPA                          0
                                                  2009-10     2010-11     2011-12    2012-13       2013-14    2014-15
                                                                                  Year
                       Jalandhar
                                              LPG Infrastructure

                  Panipat
           Bhatinda             Delhi
                                 Loni
               Ajmer                                                          Digboi

                             Kanpur                                Guwahati
                                           Barauni Kolkatta
Kandla                                                                            Existing Pipelines
Jamnagar                                                                         Proposed Pipelines
                                                       Haldia
           Hazira
                                                                Facility       Existing    Plan/Under
 Mumbai             Mumbai                         Paradip
 High                                         Vizag                                        Construction
                             Secunderabad
                                                                Refinery          19            3
                                   Vijayawada
           Mangalore                                            Gas Plants        10             -
                                        Chennai
                                                                Import        4(3500TMT)    2(1400TMT)
                                                                Bottling          189           13
                                                                Plants
                     Kochi
                                                                Pipelines      2182 KM       1000 KM
 LPG Infrastructure / Logistics

Modes of Transportation :

                                    LPG Pipelines
                                        30%



 Road Movement
      58%
                                    Railway Wagons
                                          12%




     Pipeline contribution upto 35% by 2015
    Investment Planned Till 2015
       Facility          Numbers/    Investment
                         Capacity    Million USD
Import Facility           2 (1400         140
                          TMTPA)
Tankage
   Traditional/Mounded   14.3 TMT        50
                  Cavern 0.1 MMTPA      110
Pipelines
              Planned     1000km        515
        Investment Planned till 2015
         Facility            Numbers /     Investment
                              Capacity       Million
                                              USD
Bottling Plants
    Under Construction 2 X 44 TMTPA           10
                    Planned 6 x 44 TMTPA      40
Filing Equipments
           Augmentation      900 TMTPA        20
Equipments ( Cylinders        65 million     1560
& Regulators)
Total                                         2445
                     Conclusion
• In India, LPG is the most sought after fuel for domestic use.

• Government of India has developed a Vision 2015 document for
  increasing use of LPG in India.

• The Vision 2015 document is focused to improve customer
  Service and availability of LPG.

• Government of India is committed to increase the penetration
  of LPG in Rural India by providing LPG at affordable price.

• As a commitment to Environment, Government of India is also
  committed to replace kerosene by LPG at the earliest.
Thank You
    Domestic LPG Penetration

                        Urban   Rural            Total

Population March 2009
                        326.2   838.8            1165
in Million

Households in Million   93.1     156             249

LPG connections in
                        81.2     26.8            108
Million

Penetration             85%      17%             42%
Per capita
                         128      83             117
consumption (Kg/year)

                                       Source : NCAER

    Huge Potential Available in Rural Area
                                               Indian LPG Scenario
Source: PPAC/Industry Figures

     Demand & Production 2004-09                                                       Sources of Bulk LPG

           14
                                                    11.3           11.8
           12   10.0      10.1          10.5
                                                           8.9            9.3
  IN MMT




           10                                 8.4
                   7.7           7.6
            8
            6
            4
            2
            0
                2004-05   2005-06       2006-07     2007-08      2008-09

                             Demand            Production


                  Import Growth (TMT)                                                   Source Countries
3000

2500                                            2453                  2583      2592

2000                                   2217
                                                            1981
1500                      1491
1000
                 865
 500
     0
            2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

				
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