India toppled Japan as the world’s second-largest importer of liquefied petroleum gas as Prime Minister Narendra Modi’s pledge to provide cooking gas cylinders to the poor and wean them off polluting fuels drove up consumption.
Imports of LPG, mostly used as cooking fuel, soared 23 percent during the financial year that ended March 31 to 11 million tons, according to data from oil ministry’s Petroleum Planning & Analysis Cell. Japan’s imports slipped 3.2 percent during the same period to 10.6 million tons, according to its finance ministry. China remains the world’s top importer.
Modi’s government in May 2016 embarked on a drive to provide free cooking gas connections to women from extremely poor households, aimed at reducing the use of polluting fuels such as wood and dried cow dung that, according to the World Health Organization, causes 1.3 million premature deaths in India every year. This push led to a record distribution of 32.5 million new cooking gas connections during the year.
“It’s a game changer,” said Ong Han Wee, who heads the LPG team at Singapore-based Facts Global Energy. “Never in history we have seen such huge LPG usage in India. LPG will remain main cooking fuel for India over next two decades.”
Free gas connections coupled with at least two other government programs have taken India’s active LPG user count to about 200 million, about 60 percent more than Japan’s entire population.
India aims to increase LPG usage to cover 80 percent of its households by March 2019, against 72.8 percent as on April 1. Japan on the other hand is cutting back on LPG as a cooking fuel and is moving to cheaper alternatives such as natural gas, according to Ong.
The target of adding 50 million new LPG users will boost demand for the fuel by 10 percent for the next two years, according to Nevyn Nah, oil product analyst at industry consultant Energy Aspects Ltd. “Thereafter, we have to see what India plans for future growth.”
India’s consumption of LPG during the year to March 31 was 21.55 million tons, registering a 9.8 percent growth from the previous year. Demand for the fuel may touch 35 million tons by 2031-32 due to an increase in the penetration of cooking gas connections in rural areas, Oil Minister Dharmendra Pradhan told Indian lawmakers last month. The nation added 21 million new users in the past year under a program to increase access for the poor to LPG, he said on Monday.
According to estimates by the PPAC, India’s LPG consumption is expected to grow 9.7 percent in the current financial year that started April 1 to 23.7 million tons. Overseas purchases are poised to become the dominant source of the fuel in 2017-18, as consumption surpasses local production, according to an oil ministry official. India imports 40 percent of its LPG requirements, predominantly from the Middle East, and is discussing long-term import contracts with exporting nations, Pradhan said in March.
“A million tons a month LPG imports will soon be a reality,” said Facts Global’s Ong. “Impact of India’s growing LPG usage will become more visible on global markets over coming years.”