While India is surplus in petroleum products, production of LPG in the country is lower than the demand. The deficit is met through imports which have to be increased if any of the 20 refineries in the country produces less than projected LPG. (Agencies)
Sources said that modern refineries have the flexibility of changing product slate and often LPG production is pushed down in favour of high value of petrol and diesel.
Change in production profiles of refineries especially private sector units, has in the past led to LPG scarcity and the resultant delays in delivery of domestic cooking gas.
To tide over this, the Oil Ministry sought law ministry's opinion last month if the government can ask both public and private sector oil refineries to produce a certain volumes under the Essential Commodities Act of 1955.
Sources said that the Law Ministry in its opinion has stated that petroleum and petroleum products are among the essential commodities defined under the Essential Commodities Act, 1955.
Section 3(1) of the Act empowers the Union government to provide for regulating or prohibiting the production, supply and distribution of essential commodity and trade for maintaining or increasing supply of any essential commodity or for securing their equitable distribution and availability.
The government, the law ministry opinion said, can issue an order for LPG under Section 3(1).
"In view of the above provision of the Act it appears that the Central government may by an order under the (Essential Commodities) Act mandate a minimum percentage of LPG production from all the refineries," it said.
Against a projected demand of 16.5 million tonnes, indigenous availability of LPG is only 10.4 million tons during the current fiscal. The remaining 6.5 million tons is being met through imports.
Sources said that while petrol production by refineries has risen by a compounded annual growth rate (CAGR) of 13.9 percent in five years beginning 2007-08, CAGR in LPG production was only 1.5 percent. Diesel too has shown a CAGR of 7.2 percent.
The government has drawn an ambitious target of increasing LPG penetration in the country to 75 percent of the population by releasing 5.5 crore new connections by 2015.
Focus of Vision 2015 is to extend the usage of LPG for cooking purposes in rural/under- served areas so that standard of life in rural areas improves by switching from kerosene or firewood to environmental friendly fuel, they said. To achieve this, domestic production has to increase, they added.
Presently, 16.24 crore domestic LPG connections cover about 62 percent of the population.
While India is surplus in petroleum products, production of LPG in the country is lower than the demand. The deficit is met through imports which have to be increased if any of the 20 refineries in the country produces less than projected LPG.