Home Economy Imminent petrol price hike pleases LPG auto fuel vendors

Imminent petrol price hike pleases LPG auto fuel vendors


Kozhikode : A hike in petrol and diesel prices is no cause for cheer to the public but dealers in automobile LPG (liquefied petroleum gas) feel it will generate more business for them.

LPG has gained popularity in Kerala as an alternative fuel to run vehicles. But with LPG prices rising due to a hike in international crude oil prices, the sale of LPG for automobiles is taking a hit.

“What attracts people to LPG is that it is cheap compared to petrol. But when the difference between petrol and auto LPG prices narrows, the viability of our business is at stake,” said Roshan D. Joseph of JK LPG Fuel Station here.

“In 2003, a litre of auto LPG cost Rs.17. Today the gas price is Rs.34.76 while the petrol price is Rs.46,” he pointed out.

B. Ashok, deputy general manager of the Indian Oil Corporation (IOC), said: “The price of automobile LPG is not subsidised by the government. Its price is entirely dependant on the international crude oil prices and the country is importing LPG to meets its requirements.”

While government intervention checked the escalation in the prices of petrol, there has been an unbridled rise in automobile LPG prices in the past few months.

“The price of auto LPG in October 2007 was Rs.26.42. In December it went up to Rs.31.10. This month the price rose by more than Rs.4,” said Joseph.

The price of a litre of LPG now stands at Rs.34.76 here while that of petrol is Rs.46.

“In 2003, the price of auto LPG, at Rs.17, was half of that of petrol. Now the LPG price is around 78 percent of petrol price. This makes it unattractive for ordinary customers,” Joseph said.

The mileage derived from LPG is also 20 percent less compared to petrol.

“For a vehicle with 10 km mileage per litre of petrol, the use of auto LPG at current prices will save only around Rs.0.30 per km. At this margin, the LPG will benefit only those who make intensive use of their vehicles,” Roshan added.

Kerala currently has around 60 auto gas LPG stations, 30 of them in the public sector. The Indian Oil Corporation (IOC) has the maximum number of LPG dispensing stations in the state. The price of gas varies only marginally between different vendors.

“Currently, we have 21 stations in the state. We are planning to add 15 more by March,” said Ashok.

“When the LPG price was around Rs.25 per litre, the consumers of auto LPG enjoyed a benefit of around 30 percent. Now the price has gone up by Rs.10. Obviously they enjoy less benefits,” he said.

The IOC is expecting only marginal fall in demand for LPG due to the rise in gas prices.

“People started observing the LPG prices only recently. This happened as the difference between LPG and petrol price narrowed. The IOC is yet to assess the impact of price rise on LPG sales. We expect only a marginal impact,” said Ashok.

“Those who have already made their vehicle LPG compatible will be coming for refills. But, now, people will be hesitant about spending money to make their vehicle LPG compatible. With petrol price rise on the cards, the scenario will change again,” he added.

Owners of workshops that fix LPG conversion kits on vehicles are also looking forward to a hike in petrol prices.

“As the price of LPG went up the number of customer fell by around 25 percent. If government hikes petrol price people will come back to us,” said Santhoh S., manager of Hi-Tech Car Gas here.