Satisfying Enormous Growth Potential

1. 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

2. 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

3. LPG- History & Background Customer growth rate(in millions) 1985-2009 • LPG Marketing Commenced in India in 1955 • Started by Burmah Shell in Mumbai • Public Sector Oil Company , Indian Oil Commenced Operation of LPG Marketing in 1965 at Kolkatta and Patna • Product availability improved from 1998 • Customer strength grew from 20M to 100M in a decade • Sales jumped from 1241TMT in 1985 to 11400 TMT in 2008 • Currently catering to more than 50% of Indian population. • Growth poised more towards rural markets Sales in TMT 1985-2009

4. Various Products Marketed in LPG Share of Products • Domestic LPG • Packed product in 14.2Kg, & 5kg cylinders, home delivered through distributors • Non Domestic LPG • Packed product 19Kg and 47.5 kg delivered supply through distributors. • Bulk • Delivered to Storage Tanks of Customers- Business Associates to garner Customers • Auto LPG • Through Retail Outlets along with MS/Diesel and/or stand alone outlets

5. 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

6. LPG Marketing Overview Consumption Pattern - LPG • There is steady growth in LPG consumption in the last 4 years. (Figs. In TMT) .

7. Domestic LPG Penetration Urban Urban- Rural Population Rural 14% 3% Population wise Division- Rural 83%

8. 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

9. 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

10. 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

11. 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

12. Community Kitchen 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. 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.

14. Supply Demand Balance Historical • LPG Demand Projections • Expected – CAGR 8% • Asia Pacific – CAGR 6% • LPG Supply Outlook • Existing Refineries being expanded and 3 new Refineries being commissioned. • However, dependence on Imports to continue • Two import facilities Kochi & Chennai 1400TMTPA Demand Indigenous Production Import Projection Demand Indigenous Production Import

15. LPG Infrastructure Jalandhar Panipat Bhatinda Delhi Loni Digboi Ajmer Kanpur Guwahati Barauni Kolkatta Existing Pipelines Kandla Proposed Pipelines Jamnagar Haldia Hazira Mumbai High Paradip Mumbai Vizag Secunderabad Vijayawada Mangalore Chennai Kochi

16. Modes of Transportation : LPG Infrastructure / Logistics Pipeline contribution upto 35% by 2015

17. Investment Planned Till 2015

18. Investment Planned till 2015

19. 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.

20. Thank You

21. Domestic LPG Penetration Source : NCAER Huge Potential Available in Rural Area

22. Indian LPG Scenario Source: PPAC/Industry Figures Sources of Bulk LPG Demand & Production 2004-09 Import Growth (TMT) Source Countries