1. Satisfying Enormous Growth Potential 7 th to 9 th October-2009, Rio de Janerio, Brazil Rural Demand In India 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 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 Customer growth rate(in millions) 1985-2009 Sales in TMT 1985-2009

4. Various Products Marketed in LPG 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 Share of Products

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

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

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. 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 Low Cost, Self Employment Rural Model

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 I mport Indigenous Production Demand 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 Historical Projection I mport Indigenous Production Demand

15. Mumbai Vizag Panipat Guwahati Haldia Vijayawada Kochi Barauni Kanpur Kandla Jalandhar Delhi Digboi Chennai Mumbai High Mangalore Secunderabad Ajmer Paradip Jamnagar Loni Hazira FacilityExistingPlan/Under Construction Refinery193 Gas Plants10- Import4(3500TMT)2(1400TMT) Bottling Plants 18913 Pipelines2182 KM1000 KM LPG Infrastructure Existing Pipelines Proposed Pipelines Bhatinda Kolkatta

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

17. Investment Planned Till 2015 FacilityNumbers/ Capacity Investment Million USD Import Facility2 (1400 TMTPA) 140 Tankage Traditional/Mounded14.3 TMT50 Cavern0.1 MMTPA110 Pipelines Planned1000km515

18. Investment Planned till 2015 FacilityNumbers / Capacity Investment Million USD Bottling Plants Under Construction2 X 44 TMTPA10 Planned6 x 44 TMTPA40 Filing Equipments Augmentation900 TMTPA20 Equipments ( Cylinders & Regulators) 65 million1560 Total 2445

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 UrbanRuralTotal Population March 2009 in Million 326.2838.81165 Households in Million93.1156249 LPG connections in Million 81.226.8108 Penetration85%17%42% Per capita consumption (Kg/year) 12883117 Source : NCAER Huge Potential Available in Rural Area

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