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July 23, 2007 12:10 IST
Multinational companies like Shell, Caltex, Elf and SHV that have been attracted by the huge possibility to market Liquified Petroleum Gas in India are these days waiting for their chance.
The government had eased all curbs for marketing LPG as early as in 1993 and allowed a parallel marketing of the commodity by private firms.
They had been promised that the government would gradually terminate subsidies and free the pricing for the commodity. Currently state owned oil companies are serving LPG at a loss of Rs 180 per cylinder.
Expecting these, multinational companies including Indian players such as Hindustan Aegis have invested big money in ports and other infrastructure at various locations.
But thanks to inaction from the government on the issue so far, major companies like Exxon Mobil have quit its proposed projects due to the heavy loss.
Others are still in the market with the hope of maintaining a toehold in the growing Indian market.
Says Bangalore-based Elf Gas India's deputy managing director V Rajeev: "We hope the government will eventually provide a level playing field, and we want to be here when that happens."
According to him, India's LPG consumption is growing at a relatively healthy rate, between 8 percent to 10 percent annually, while global growth is only 2 percent. India consumes around 11 million tonnes of gas; and nearly 90 percent of it is used by households for cooking.
Earlier, MNCs had started selling cooking gas in their own brand; but later they turned back due to lack of consumers for the product considering higher price compared to state owned oil firms.
"Most of the companies have now virtually stopped retail sales and are now focusing on the industrial and commercial market," says Rajiv Chohan of Shell Gas.
These companies have formed an association called Indian LPG Industry Association, for protecting their interests. "The artificially low pricing of LPG has resulted in large-scale diversion of the product for use as auto fuel and other such applications," said S K Hazra an official of the association.
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