India offers free LPG refills during lockdown

Delhi has offered poorer homes three free cylinder refills until June as part of its $23bn coronavirus stimulus package

India has witnessed a threefold increase in requests for cylinder refills after the government said it would provide low-income households with free LPG over the next three months after introducing a 21-day lockdown on 25 March.

Residential customers that qualify for the PMUY subsidy scheme can refill 14.2kg cylinders up to three times for free until the end ofJune. The move is part of a 1.7 trillion rupee ($22.6bn) stimulus package to counter the economic impact of the coronavirus outbreak. Around 83mn poorer households are eligible for the PMUY subsidy, which has been running since 2016, meaning the offer represents up to 3.5mn t of LPG.

The increase in demand is putting a strain on domestic refineries, with refill bookings up by more than 200pc prior to 25 March, state-controlled refiner IOC chairman Sanjiv Singh says. The firm has contracted around 850,000t of additional LPG imports to meet the demand, Singh says.

IOC supplies LPG to 131mn of the country's approximate 278mn residential customers, and supplied 2.5mn refilled cylinders out of a total of 5.2mn over 20-30 March. But deliveries of the cylinders are being hindered by LPG distributors struggling with staff absences owing to the lockdown, state-run refiners say. India had 1,637confirmed cases of coronavirus and 38 deaths as of 1 April.

Saudi Arabia, India's main LPG supplier, has agreed to increase supplies to cater to India's demand, oil minister Dharmendra Pradhan says. State-owned Saudi Aramco set its propane and butane contract prices (CP) for April at $230/t and $240/t, down by $200/t and $240/t as a result of the pandemic and Opec price war.

The lockdown is expected to boost residential demand in India, as LPG is predominantly used as a fuel for cooking in homes. Residential demand accounts for around 87pc of all LPG sold in India. Any increase in refinery production is likely to fall short of the rise in demand and lead to an increase in imports. India produced 1.12mn t of LPG in February and imported 1.34mn t. Demand was 2.11mn t, down from a record high of 2.45mn t in January.

Safe harbour

Some Indian ports have declared force majeure to protect themselves against any penalties because of delays caused by the lockdown. Loading at Haldida was facing delays towards the end of last month — although only of around two days — because fewer tugboat pilots were available to guide the vessels.

Rules have been introduced requiring incoming vessels to be quarantined for 14 days. India depends on LPG imports to meet a large part of its demand, and will need to relax restrictions to allow vessels carrying LPG from the Mideast Gulf. Strong relations between India and Saudi Arabia and Delhi's goal to ensure smooth supply of essential LPG to households during the lockdown will allow port operations to continue, officials say.