Reliance forays into LPG retailing

Reliance Industries, operator of the world's biggest oil-refining complex, has forayed into cooking gas retailing, launching a 4-kg LPG cylinder on pilot basis.

"Four-kg LPG cylinder launched in 4 districts on pilot basis," RIL said in an investor presentation on second-quarter earnings. LPG consumption is growing by over 10 per cent and private refiners RIL and Essar Oil want a pie of it.

Currently, public sector retailers Indian Oil, Bharat Petroleum and Hindustan Petroleum control retail LPG market, selling cooking gas in 5-kg, 14.2-kg and 19-kg cylinders. They sell 12 cylinders of 14.2-kg or 34 bottles of 5-kg per year to households on subsidised rates and any requirement above that on market price. The 19-kg cylinder is for commercial use.

Private firms are not entitled for government subsidy and they have to sell fuel at market price. But with the government restricting volume of subsidy as well as barring consumers earning more than Rs 10 lakh per annum from subsidised LPG, a ready-made market is now available for private oil companies. "Mobile App rolled in all operating states to enhance customer experience," RIL said in the presentation.

The company sells most of the LPG produced by its twin refineries at Jamnagar in Gujarat to public sector retailers. While RIL did not disclose the price at which it is marketing the 4-kg cylinder, a 5-kg subsidised domestic LPG cylinder costs Rs 158.50 in Delhi. A 5-kg cylinder for domestic use is priced at Rs 181 while it costs Rs 252.50 for non-domestic use.

A subsidised 14.2-kg cylinder costs Rs 427 in Delhi and a non-subsidised bottle comes for Rs 490. A 19-kg cylinder is priced at Rs 895. Domestic LPG consumption rose 10.8 per cent in April-September this year to 10.2 million tonnes, nearly half of which was imported. The government had last year permitted RIL to sell up to 1.2 lakh tonnes of LPG produced at its plants to private cooking gas marketers. 


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