The Voice of Mr S. M. Vaidya, Chairman of Indian Oil Corporation & WLPGA First Vice-President
The Voice spoke with Mr S. M. Vaidya, Chairman of Indian Oil Corporation & WLPGA First Vice President to have his view as new WLPGA Board Member and First Vice-President.
WLPGA: Given the universally challenging year we have all gone through, where do you believe are the key opportunities for the Indian LPG market in 2021 and going forward?
S. M. Vaidya: For LPG, it has been business as usual during 2020, registering a robust growth of around 6% for the current Financial year. Main growth opportunities lie in reaching out to the marginalised and financially disadvantaged customers enrolled under PMUY (Pradhan Mantri Ujjwala Yojana). You would be aware that Pradhan Mantri Ujjwala Yojana was launched by Hon’ble Prime Minister of India Mr Narendra Modi in 2016 to distribute free LPG connections to women from financially disadvantaged sections. While the initiative has been a transformational one, we need keep working at grassroot level to change the consumption habits of such consumers. Presently, they procure merely three cylinders or 42 Kg of LPG in a year, which is half of the country's average consumption. This challenge also presents a great business opportunity for us in 2021 and ahead. Our opportunity also lies in converting users of liquid fuel to LPG. For transportation, LPG can act as a transitional fuel in the medium term. Also, even Non-Domestic LPG is also fast making up the ground lost during to recent COVID-19 pandemic.
WLPGA: How do you feel that the LPG market in India responded to the COVID-19 pandemic?
S. M. Vaidya: COVID-19 brought with it some unique challenges for the oil & gas industry. While there was little to no consumption of vehicular fuels, the demand for LPG was at an all-time high. It took tireless efforts by brave Corona warriors comprising Delivery Persons, Distributors, Staff in Bottling Plants, Transporters and Drivers, to keep the kitchen fires burning across the nation. Our industry adeptly met the 30% demand spurt and delivered LPG at doorsteps within the promised timelines, even during the most challenging phases. There was no backlog, and the initial panic was addressed quickly with our prompt services. The country has over 99% LPG penetration, and in a herculean effort, the industry delivered more than 5.7 Million Domestic LPG Cylinders in a day. I am proud of the entire LPG team in India. From the production managers at bottling plants to our delivery personnel carrying the cylinders to the doorsteps, everyone deserves our sincere appreciation. Team LPG in India has demonstrated the highest excellence levels during crisis management, strengthening the trust that the nation has reposed in us.
In the commercial segment also we have been supporting industries with uninterrupted supplies.
During April-May 2020, we went for an additional LPG import tie-up of 375 TMT to meet the sudden spurt in demand on account of the PMGKY (Pradhan Mantri Garib Kalyan Yojana scheme). All bottling plants & transport infrastructure were operated at full capacity. Let me also add that driven by our core value of Care, we had arranged for food and other essential supplies for our corona warriors during the lockdown across locations.
WLPGA: And what do you see as key threats to the industry in India, and how might the industry overcome them?
S. M. Vaidya: There are a few concern areas that need our focus and concerted action.
- Firstly, we have to ensure sustained LPG consumption by PMUY LPG Consumers.
- Secondly, High international prices of LPG is a major deterrent. LPG in India is highly dependent on imports. More than 50% of our LPG is sourced through imports. So any geopolitical unrest is likely to have a drastic impact on our supply lines.
- Thirdly, our Non-domestic consumption is only 12% of the total LPG consumed in the country. It was 3.2 MMT during 2019-20, including packed non-domestic for industrial usages, Bulk LPG & Auto LPG.
However, from the supply point of view, we have reasons for optimism as well. Our indigenous technology INDMAX increases LPG yield from refineries and is likely to emerge as a game-changer. Also, refinery expansion will contribute to an increase in LPG production.
WLPGA: On a wider angle, what are the main areas of focus for improvement for the LPG market in India?
S. M. Vaidya:
- 80 Million connections have been enrolled for PMUY customers since 2016. The Government has set a target for enrolling additional 10 Million Domestic LPG connections for poor beneficiaries.
- Share in Non-domestic usages of LPG has to be improved beyond 12% by tapping new avenues & industries, including the agricultural sector.
- To build on our commitment to strive for a greener tomorrow, we must also focus on converting solid/liquid fuels to Gaseous fuels.
- New applications of LPG, like as a Bunkering fuel or as a petrochemical feedstock, must also be leveraged.
WLPGA: Diversity is a very important issue and we know that IOC is very active in promoting diversity, both in within the company and in supporting beneficiaries around India. What are your ambitions to further support diversity in IOC?
S. M. Vaidya: As the future-ready "Energy of India", IndianOil has been investing across the energy spectrum, whether it is Natural Gas, Renewables or Biofuels. Our R&D Centre has been working with an unwavering focus on technologies related to Hydrogen, Carbon Capture, Utilisation & Storage, Advanced biofuels as well as electric mobility.
At IndianOil, we recognise the power, opportunities and challenges associated with the ongoing energy transition. The events of 2020 have not altered our vision but reinforced our overall perspective. We have started LPG imports from the US around three years back. This has allowed us to diversify in sourcing, which is essential to improve the supply line's sustainability.
IndianOil has always been a strong votary of driving social stewardship. We are happy to have fueled the dreams and aspirations of our communities for a long time now and will continue to do the same with much more zeal and fervor.
WLPGA: You joined the WLPGA Board in November last year; what are your hopes and goals? As our newly elected Board member, what are your ambitions for this role?
S. M. Vaidya: Firstly, I feel privileged to be associated with WLPGA, a global voice for all LPG Industry stakeholders. WLPGA has been working assiduously during the last three decades or more for Global LPG Industry, creating a strong synergy among all stakeholders. It has emerged as a definitive authority in promoting best practices. I hope that my experience in the Indian LPG landscape will help this institution explore exciting growth opportunities on behalf of our stakeholders.
I want to utilise my extensive Indian LPG Industry network and the strong reputation of both the Indian LPG Industry and the WLPGA to benefit people and society.
Indian LPG Industry has scripted a fascinating growth story over the last few decades. It has emerged as a vast energy umbrella, leveraging strong synergies between oil & gas sector players to transform the lives of millions of users in every part of the country.
The missions for both the Indian LPG industry and the WLPGA are quite similar, and building on that solid synergy, I hope to make a difference.
I look forward to a very successful and grand World LPG Forum in India in 2022.