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Stepping on the Gas

Dharmendra Pradhan Dharmendra Pradhan | 30 Sep, 2016

Today, India is among the fastest-growing major economies in the world. The Union government is driving bold reforms across sectors bolstering this strong growth momentum. We realise that in this growth story, the oil and gas sector plays a central role and must expand in tandem with the rapidly expanding energy requirements of the country. According to the IEA’s World Energy Outlook (2015), India’s oil demand is estimated to grow from 3.8 million barrels a day to 9.3 million barrels a day—an increase of around 6 million barrels—raising our demand to 458 million metric tonnes by 2040.

Meeting this demand would entail expanding our current refineries as well as setting up of new, mega refineries to augment our current capacity of 236 million metric tonnes per annum. The Ministry of Petroleum & Natural Gas is committed in its efforts of expansion and growth across all aspects of the value chain. These efforts have manifested in various successful initiatives like discovery of natural gas hydrates in Bay of Bengal, expansion of refining capacity as well as plans of setting up a mega refinery of 60 million metric tonner per annum on the West Coast, joint ventures in alternate energy sources and so on.

Another example of successful expansion is the BPCL Kochi Refinery Limited, which celebrates its golden jubilee this year. Started in 1966 with a capacity of 50,000 barrels per day, over the last 50 years it has cemented its proud position as a front-runner Fortune 500 Company. Operating at a capacity of 9.5 million metric tonnes per annum, its product portfolio covered multiple petrochemical feedstocks, speciality products in addition to its range of quality fuels.

The Kochi Refinery, which is a Navratna Public Sector Undertaking, embarked on a journey to further expand its capacity to 15.5 million metric tonnes per annum. An investment of Rs 16,504 crore was made for this Integrated Refinery Expansion Project (IREP). With this upgradation, the refinery would be able to produce auto- fuels, complying with Euro-IV/V specifications to meet the growing demand of petroleum products in Indian market. This would also upgrade the refinery residue stream to value added distillates and create synergy for future diversification into value added petrochemical products.

For further downstream economic activity, the refinery has additionally initiated work on petrochemicals. It has started the work on the Propylene Derivatives Petrochemicals Project (PDPP). This Rs 4,700 crore project is expected to be commissioned by August 2018. The IREP project will yield approximately 1.4 million metric tonnes per annum (MMTPA) of pet coke, which can help the Kerala government produce around 500-600 MW of power.

The project is a significant milestone in bolstering India’s refining capacity to meet future requirements for a wide range of petroleum products, including petrol, diesel, and kerosene, cooking gas and aviation fuel. The government is committed to pushing the envelope in order to meet the country’s energy demand.

Besides infrastructure-oriented push, the government is equally, if not more, dedicated to ensuring that each citizen has access to affordable and reliable energy. The Ministry of Petroleum and Natural Gas has always suffered from this perception of being the ministry of the corporates, primarily focused on the issues that concerned companies nworking in the hydrocarbon sector. But ever since the current government assumed charge in May 2014, it has made it a mission to emphatically alter this image and pivot the Ministry’s work to be in line with the vision of Prime Minister Shri Narendra Modi. The PM had made it clear in his very first speech in Parliament where he claimed, “Our Government is dedicated to the welfare of the poor; whatever we do, will be for the welfare of the poor”.

Evidently, the Ministry has been working tirelessly to ensure that the underprivileged and the marginalised have access to energy. The Hon’ble Prime Minister has termed this “Energy Justice”. The Ministry has launched several transformative initiatives to eradicate energy poverty through financial and energy inclusion. These programmes are focussed on ensuring last mile delivery of petroleum products, even in the most remote parts of the country.

Following upgradation, KRL will be able to produce auto-fuels, complying with Euro-IV/V specifications to meet the growing demand of petroleum products

The journey started with the roll-out of PAHAL scheme in November 2014. Under PAHAL or Direct Benefit Transfer scheme, the subsidy on cooking gas cylinder was being directly transferred to the consumer’s bank account. This helped the government contain the scourge of black marketing of gas cylinders. Secondly, the government was able to weed out dubious and duplicate beneficiaries, bringing down the subsidy bill. For the consumer, it meant assured and quick supply of gas cylinders while the money against subsidy is directly credited to their accounts. Till date, there are 16.14 crore beneficiaries under PAHAL while we have transferred subsidy worth 41,712 crore rupees to bank accounts. PAHAL entered into the Guinness Book of World Records as a largest direct benefit transfer scheme in the world. It has recorded a saving of Rs 21,000 Crore through elimination of duplicate, fake or ghost consumers.

While PAHAL has ushered in much needed transparency in sale and distribution of cooking gas, the next big question that faced us was the exclusion of a large section of Indian society from the LPG network. Despite 70 years of freedom, large swathes of the country’s hinterland are still dependent on traditional cooking fuels – also called biomass-cooking fuels – such as coal, wood, straw, and dung-cakes. While easy availability and low costs make them widely prevalent in low-income households not only in India but also in most of the developing countries, the difficulties faced during collection and the resulting pollution make these fuels severe health hazards.

The Central government adopted a two- pronged approach to address this critical issue. On one hand, the Hon’ble Prime Minister launched a national movement ‘Give it Up’ where he appealed to the affluent and middle class to give up their LPG subsidy and aid the government in directing those benefits to the poor and marginalised. His appeal found resonance with the public and the response was tremendous. Over 1.05 crore people voluntarily gave up their cooking gas subsidy. This goes to show that people are willing to contribute, provided a trustworthy visionary leads them.

This was followed by one of the most ambitious and elaborate schemes, the Pradhan Mantri Ujjwala Yojana (PMUY). In a historic move, the government decided to provide free LPG connections to 5 crore women from BPL households at a budgetary cost of Rs 8,000 crore in three years. The scheme was rolled out by the PM on May 1, 2016 at Balia in Uttar Pradesh. PMUY aims at empowering millions of poor women in our country who are forced to inhale unhealthy emissions from burning coal, wood and other unclean fuels while cooking, as they neither had access nor resources to LPG, a clean fuel. LPG connection was seen as a privilege being enjoyed by the higher strata of rural India.

OMCs such as BPCL and others have played a stellar role in implementing a wide array of measures for the benefit of the common man

LPG connections provided under PMUY are being seen as a great tool of empowerment, apart from being able to bring obvious health benefits. It is set to bring dignity and respect to the lives of millions of women in our country. It has come out as a social leveller much the same way mobile phones have been to society. Within a short span of four months since the launch of the scheme, the Ministry has been able to release 60 lakh connections while another 40 lakh applications have been cleared which will be provided connection soon. Under this scheme, priority is given to such States having LPG coverage less than the national average, which ultimately benefits the eastern India states, as most of these states are below the national average.

The Petroleum Ministry also unveiled an ambitious plan to increase LPG access to more than 75% of households by 2019. To meet the rising demand of LPG due to increasing coverage, the Government is taking steps to start the process of establishing 10,000 new LPG distributors in addition to an existing robust network of 18,000 distributors serving consumers in every nook and corner of the country. Special emphasis has been given to ensure easy access to LPG in difficult and special areas such as forest areas, tribal inhabited areas, islands, etc. by allotting distributorships on nomination basis to Government- run agencies. Women entrepreneurs are encouraged to participate in supply chain management by providing 33 % reservation in new distributorships.

This is changing the canvass of LPG marketing in the country in terms of accessibility and availability. The Oil Marketing Companies—Indian Oil Corporation Limited, Hindustan Petroleum Corporation Limited and Bharat Petroleum Corporation Limited—have played a stellar role in implementing a wide array of measures for the benefit of the common man.

These national companies have significantly enhanced the ministry’s social outreach programme so that every citizen of the country feels empowered. All the three schemes—PAHAL, Give it Up, and Ujjwala—are closely inter-linked and the success of PAHAL and Give it Up coupled with successful rollout of Ujjwala shows our government’s devotion towards the uplift of the poor and marginalised, to support them to lead a life with health, honor and dignity. Also, it signifies that a lot can be achieved with a combination of vision and strategic planning. Each LPG connection today is a symbol of empowerment and frees women from the drudgery of collecting firewood every morning.

Going forward, the outlook for Indian economy is positive. The Ministry for Petroleum & Natural Gas is dedicated to continuing strengthening this growth by maintaining the fine balance between infrastructural development and ensuring that the gains from the industry trickle down to reach those at the bottom of the social pyramid.

(The author is Union Minister of State (with Independent Charge) for Petroleum and Natural Gas)

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Bharat Petroleum BPCL Kochi petroleum