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HindustanTimes Sat,19 Apr 2014

As cooking gas policy changes, RIL smells opportunity

Anupama Airy, Hindustan Times  New Delhi, March 31, 2013
First Published: 21:27 IST(31/3/2013) | Last Updated: 21:30 IST(31/3/2013)

The domestic cooking gas (LPG) retailing market, which is dominated by the three state-owned oil companies, may soon see a private-sector competitor: Reliance Industries Ltd (RIL), controlled by billionaire Mukesh Ambani, is said to be mulling a foray into the segment.

Sources close to the company told HT that the nine-cylinders-a-year cap on subsidised LPG cylinders has opened a lucrative window for private energy companies supply non-subsidised cooking gas (beyond 9 cylinders) to domestic households.

The company spokesperson refused comment, but sources said “the company will look at all possibilities that make sense for its business growth.”

RIL is already doing a test run of markets in Gujarat and Maharashtra, supplying small quantities of auto and industrial LPG. Company sources said it may look at these two states to begin cooking gas operations, as all-India operations call for a big infrastructure and dealership network.

“The entry of private players in the non-subsidised LPG segment can actually generate a price competition among suppliers to the benefit of consumers, bringing down the price,” said a senior petroleum ministry official.

After the new cap was imposed, households consuming more the nine cylinders a year have to pay market price of about Rs. 900 for the 14.2-kg cylinder as against Rs. 410 for the subsidised cylinder (in Delhi).

If a private player engages in selling unsubsidised gas, it  can offer cylinders at a discount to the international market prices in order to garner market share.

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