LPG, Energy Access and the Indian Context - M K Surana New Delhi - PowerPoint PPT Presentation

Questions LPG, Energy Access and the Indian Context - M K Surana New Delhi February 7, 2017 1

Questions India : Fast facts • 18% of the world’s population (1.31 billion in 2015) with improving urbanization rate 3 rd largest economy in the world by GDP (PPP basis) • expected to grow at a CAGR ~7-8% through 2040 • 3rd highest in energy consumption - consumes 5.3% of world’s primary commercial energy • Average energy consumption growth has been 5.3% p.a. (CAGR-5 years) • Energy consumption/capita (533 KGOE) is among the lowest in the world with high growth potential as the economy grows: 1/11 th of North America’s per capita energy consumption • 1/6 th of European Union consumption • 1/4 th of China and 1/3 rd of Global average • Rapidly Expanding energy needs and High demand for energy Source: PNG Statistics 2015-16, IMF Outlook and World Bank data 2

Questions Energy Trends : India • Energy consumption in India is projected to double, growing by a CAGR of 4.3% per year to reach ~ 1314 mtoe by 2030. • The energy mix is projected to change with Renewables & Gas increasing the share and Oil holding steady. • Fossil fuels remain the dominant source of energy powering the Indian economy, providing around 84% of the growth in energy demand (Coal – 43%, Oil – 30% and Gas -11%) between 2015 to 2030 and accounting for about 89% of total energy supply in 2030 (down from 93% in 2015). • Gas is seen to be increasingly used in the industrial sector and for power generation. Liquid fuels continue to dominate in the Transport sector. • Among non-fossil fuels, renewables (including biofuels) is projected to grow rapidly (11.7% p.a.) , increasing share in primary energy from 2% in 2015 to reach 6% by 2030. • Renewables is seen competing with fossil fuels in Power sector . The degree of Policy measures in carbon emissions will see increased use of LPG and Natural gas 3

Questions 2015-16 : Consumption of Petroleum Products Product wise volumes / 5 Y CAGR% 2015-16 (Percentage) HSD HSD = 75 MMT 4.5% 18% MS MS = 22 MMT 9.0% 6% LPG LPG = 19 MMT 6.8% 13% 41% Naphtha, ATF & SKO = 23 MMT Naphtha, ATF & SKO 10% FO & Bitumen = 11 MMT FO & Bitumen 12% Others = 33 MMT Others Total Volume = 183 MMT, 5 year CAGR of 5.4% 4

Questions Snapshot of LPG Sales in India Sales in MMT Total of 19.6* MMT LPG Sales 20.0 in 2015-16 17.2 79 million Rural 123 million Urban LPG Customers LPG Customers 1.5 0.4 0.4 0.2 0.0 Domestic (HH) Commercial Bulk Automotive Private Imports Percentage 88% 7% 2% 1% 2% of Total A total of 201 Million LPG Customers (HH) are catered through 14.2 Kg and 5 KG packed LPG cylinders *Including Private Imports 5

Questions India : World's second largest consumer of LPG Population (2015): 1,311 million Literacy Rate: 74% (2011 Census) Customer base (2016): 750 million Sales: Over 19 Million tonnes Enabled thru: 190+ LPG Bottling plants 2600+ km LPG Pipelines 18,000 + LPG Distributors In the last two years, India has embarked on unprecedented expansion of its LPG reach through several programmes 6

Questions Census 2011 : Cooking Fuel Mix in India Firewood Rural Crop Residue Cowdung cakes coal, lignite, charcoal kerosene lpg/png electricity biogas Urban other no cooking 0% 20% 40% 60% 80% 100% % of Households 7

Questions Affordable and Clean Energy 2016 : Year of LPG Consumers  There are 17 Sustainable Development Goals outlined by UN for Sustainable 2030 Goals by UN  Goal 7 is to ensure affordable and clean energy  India is the home to the largest number people lacking access to electricity and clean cooking facilities. India : Current  Out of every three persons lacking access to clean cooking Scenario fuel, one is an Indian (approximately 840 million out of 2.7 billion).  PaHaL (2014), #GiveItUp Enabler:  SAHAJ, Digital payment and cashless transactions Policy environment  Pradhan Mantri Ujjwala Yojana - PMUY (2016) 8

Questions PAHAL PAHAL • Increase effectiveness and bring • Launched: 15 th Nov 2014 GoI in Transparency • Reduce Subsidy burden • Subsidy Transferred: Rs. 4,149 Billion • Reduce or prevent the unauthorised sale OMCs • De-Duplicate multiple connections • Cash subsidy to buy upto 12 cylinders Customer • The subsidy amount is transferred directly to the bank Percentage enrolled account > 160 Million (90%) 9

Questions PAHAL : Setting World records 10

Questions #GiveItUp: Voluntarily surrender of subsidy #GiveItUp  Scheme was launched in May’15 for LPG consumers willing to voluntary give up subsidy  Against each surrendered subsidy, LPG connection were issued to BPL family  Consumers opted out of the subsidy by submitting written request to the distributor or electronically at mylpg.in.  10 million consumers opted out of subsidy within one year > 5.5 million deposit free LPG connections were issued to BPL families in 2015-16 11

Questions Pradhan Mantri Ujjwala Yojana (PMUY) Launch: • Launched by Hon’ble Prime Minister on 01.05.2016 at Ballia district of U.P. • Aadhaar of the consumer as the primary key in verification & deduplication activities. Scheme Details: • 5 Crore deposit free LPG connections to women beneficiary • Empowering women by providing access to Clean Cooking Fuel • To improve the health of women & children • The ultimate impact is 85% LPG coverage by 2018-19 • Initiative is on ‘ Mission Mode ’, dedicated, focused approach for smooth, effective & timely implementation Selection of Beneficiaries: • Women beneficiary identified Socio-Economic Caste Census-2011 (SECC-2011) data. • Preference for SC/ST & Weaker Sections of Society Focus States: • Priority for States having Lower LPG Coverage vis-à-vis National Average of 62% 12

Questions PMUY Connections released Target : 50 Million Connections by 2018 New PMUY Connections (Million Nos) 4.0 3.7 3.5 3.0 2.6 2.4 2.5 2.2 2.1 2.0 1.5 1.5 0.9 1.0 0.5 0.1 0.0 0.0 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 New PMUY Connections (Million Nos) A total of 15.3 Million LPG Connections under PMUY scheme have been released till 31.12.2016. 13

Questions Key Success Factors for PMUY Detailed planning by Govt. of India Continuous engagement and support in implementation by MoP&NG Collaboration among OMCs and structure of District Nodal officer Camps for customer enrolment and LPG distribution LPG distributors engagement Large scale mobilization of LPG equipment Extensive deployment of Technology Mission Mode Working by OMCs 14

Questions Leveraging IT for moving towards Digital India e-SV Portal in 13 Languages for Enrollment, Payment and Online refill payment can rolling out various Govt. Release online be remitted in advance initiatives Toll free Single Number Cashless transactions for LPG compliant in Credit card and e-wallet regional languages 15

Questions Auto LPG Cars in India Hyundai i10 Sportz LPG Hyundai Eon Magna Fuel : LPG Fuel : LPG Price : 5.4 Lakhs (Ex Delhi) Price : 4.5 Lakhs (Ex Delhi) Mileage ~ 20 km/kg Mileage ~ 21 km/kg India : Witnessing increasing number of vehicles with Auto LPG and Natural gas as Fuels 16

Questions Trend of LPG Demand Projected LPG Demand in MMT 35.0 30.0 30.0 25.0 19.6 20.0 15.0 10.0 5.0 0.0 2015-16 2020-21 2015-16 2020-21 LPG Demand in the country is expected to grow at CAGR of ~ 9%, covering > 90% of Country’s households 17

Questions Challenges Supply end  LPG continue to remain in short supply and India will be dependent on Imports  The LPG Import capacity will need to be augmented  LPG Pipelines currently at < 20% and have to be augmented for effective logistics User end  Affordability by economically weaker section  Safety awareness among new users  Socio cultural issues  Type of houses 18

Questions Key Messages LPG to witness a high growth with policies aimed at providing e-SV cleaner cooking fuels and encouraging a move away from solid biomass for cooking. Most of Indian LPG demand comes from the residential sector, for use as a cooking fuel . Industries are projected to consume imported ethane along with naphtha from domestic refineries Opportunity in LPG market in India lies in Rural Domestic Segment Focused strategies needed to address issues of Availability, Affordability and Awareness 19

Questions Thank you

Questions Key Global Energy Trends • Weakening energy demand due to decline in China growth, slow recovery in Europe and shift of fuel mix from Coal to Natural gas in US power sector. • Increased Supply , due to rapid technology and productivity gains driving strong growth in US Oil output and growth in other Oil producers like Iraq, Iran and Saudi Arabia. • OPEC decided to cut production. However, the global storage inventories need to be substantially reduced for higher prices to be sustained. • Non-Fossil fuels grew on the back of growth in new entrants of Solar and Wind in Power sector, with China becoming the largest generator of Solar Power. • Technology costs particularly for wind and solar power have decreased justifying investments in new capacities. • Carbon Emissions from energy use witnessed the slowest growth in the past 2 decades. Source: Bloomberg, BP Statistical review 2016, Team Analysis 21