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LPG imports surge 60% in five years

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India’s imports of liquefied petroleum gas (LPG) surged 60% in five years as demand increased rapidly while domestic supplies stagnated.

Imports increased to 18.3 million metric tonnes (MMT) in 2022-23 from 11.4 MMT in 2017-18, according to the petroleum and natural gas ministry data. Domestic LPG production grew barely 4% in the five years to 2022-23 while consumption expanded 22%.

Domestic consumption was boosted by the government scheme to provide free cooking gas connections to poor households. The number of cooking gas consumers has more than doubled to 320 million in a decade.

Screenshot 2024-02-16 004054ET Bureau

In value terms, LPG imports cost India $13.3 billion in 2022-23, up from $5.8 billion five years earlier, as international prices of LPG climbed 46% in five years to $711.50 per metric tonne.

Expanding consumption and increasing dependence on imports means an increased burden on the country’s foreign exchange reserves.

The UAE, Qatar, Saudi Arabia and Kuwait supply more than 95% of India’s LPG imports, with the US providing a small amount in recent years, according to the International Energy Agency (IEA) data. The UAE was the top supplier in 2023, accounting for nearly a third of India’s total LPG imports. Supplies from the UAE have grown every year since 2017. LPG purchases from the UAE and Qatar are mainly made in the spot market while Saudi cargoes are sourced under long-term contracts.Households consume nearly 90% of LPG in the country while industry and commercial users account for the balance. Among states, Uttar Pradesh is the largest consumer, accounting for 13% of total LPG used in the country. Maharashtra is second with about 12% share.

Consumption of LPG is expected to expand further in the country as a large share of new consumers, especially from the lower-income group, still partly depend on alternative fuels like biomass. Once they fully shift to LPG, overall consumption will expand, further boosting exports.

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