For the first time in over a decade, India's active liquefied petroleum gas (LPG) customer base has experienced a significant decline. Between April and August of the current fiscal year, the number of domestic LPG households fell by 6.2 million, according to recent ministry data cited in a report by The Economic Times. This reduction brings the total active customer count down to 327.7 million as of early September, from 333.9 million in April.
Impact of Global Conflict and Supply Constraints
The primary driver behind this unprecedented decline is attributed to supply constraints stemming from the ongoing Iran war. This conflict has severely impacted LPG supplies from the Gulf region, which historically accounted for approximately 90% of India's imports before the hostilities began. In response to tighter supplies, oil marketing companies in India halted the issuance of new LPG connections.
Furthermore, these companies have implemented stringent Aadhaar-based biometric verification processes. This initiative aims to identify and deactivate inactive customers, detect multiple connections within a single family, and identify households that have transitioned to piped natural gas (PNG).
Government Initiatives and Regional Shifts
The government has actively encouraged consumers in areas with PNG infrastructure to switch from LPG to natural gas. This push has seen city gas companies add nearly 0.6 million new PNG customers by July, increasing the total to 17.5 million. The number of billed PNG customers also rose by 1.06 million, reaching 10.7 million. This shift to PNG accounts for roughly one-sixth of the total 6.2 million LPG customers lost.
The decline in LPG households was not uniform across the country. Southern India recorded the most substantial drop, losing 2.63 million connections since the end of March. Western India followed with a loss of 1.62 million, and northern India saw a decrease of 1.5 million. Eastern India experienced a comparatively smaller decline of 0.34 million households.
Historical Context of LPG Adoption
This contraction follows a decade of robust growth in LPG adoption across India. The active customer base more than doubled from 148.6 million at the start of the 2015-16 fiscal year to 333.9 million at the beginning of the current fiscal year. Growth rates peaked between 2014-15 and 2018-19, ranging from 11.9% to 19.6%, before slowing to around 5% or less in recent years. The current fiscal year marks a significant reversal, with an overall customer base contraction of approximately 1%.
The Ujjwala scheme, a government initiative aimed at providing LPG connections to poor households, also saw a reduction, losing about 0.6 million customers to stand at 105.7 million.