Socio – Ecological Effects of LPG Price Hikes

What’s in today’s article?

• Background
• Has the Government Been Successful in Pushing the Use of LPG Cylinders?
• How are Retail Prices for LPG Decided in India?
• Consequences of Rising LPG Prices
• What are the Suitable Alternatives?
• Way Ahead

Background

• Council on Energy, Environment and Water, a Delhi-based think tank, had conducted a survey in 2014-15 called ACCESS Survey.
  • The Access to Clean Cooking Energy and Electricity – Survey of States (ACCESS) is India's largest energy access survey.
• As per the survey, LPG’s cost was the foremost barrier to its adoption and continued use in rural poor households.

Has the Government Been Successful in Pushing the Use of LPG Cylinders?

• Since the start of the 21st century, successive governments have placed a premium on the cooking fuels in rural households transitioning to LPG.
• 2009:
  • In 2009, the Rajiv Gandhi Gramin LPG Vitrak Scheme was launched to increase LPG distribution in remote areas.
  • Nearly 45 million new LPG connections were thus established between 2010 and 2013.
• 2015:
  • Direct Benefit Transfers (DBT) for LPG under the ‘PAHAL’ Scheme were initiated in 2015.
• 2016:
  • In 2016, direct home-refill deliveries were implemented and the ‘Give it Up’ program enrolled around 10 million LPG consumers to voluntarily discontinue subsidies and transfer their accounts to below-poverty-line households.
  • The Pradhan Mantri Ujjwala Yojana (PMUY) followed, to install LPG connections in 80 million below-poverty-line households by 2020.
  • The scheme also provides a subsidy of ₹200 for every 14.2-kg cylinder, which increased to ₹300 in October 2023.
• However, it is important to note that India, with around ₹300/liter, has one of the highest LPG prices in the world.

How are Retail Prices for LPG Decided in India?

• What the consumer pays for a 14.2 kg domestic LPG cylinder comprises three components – LPG price, dealer’s commission and taxes.
• Unlike retail prices of petrol and diesel in India, where taxes account for the bulk of the price, for domestic cooking gas, almost 90 percent of the cylinder price is the cost of LPG.
• Commission and taxes account for 11 percent of a cylinder’s retail price.
• Also, more than 60 percent of India’s LPG needs are met through imports.

Consequences of Rising LPG Prices

• In 2023, a study done by the author and Amir Kumar Chhetri showed how local communities of the Jalpaiguri district in West Bengal depend on the forests for fuelwood.
• Roughly half of the 214 local shops in 10 markets used fuelwood; the shop-workers reported the cost of a commercial cylinder, ₹1,900, to be too high.
• Around 38.5% of Jalpaiguri’s population is below the poverty line and most of them work in tea estates with a daily wage of ₹250.
• Against this backdrop, the persistent use of fuelwood as cooking fuel is unsurprising.

What are the Suitable Alternatives?

• While the act of collecting fuelwood gives the people cooking fuel, it also degrades the forest and forces people to risk adverse encounters with wild animals.
• Due to various government schemes, most households in Jalpaiguri have LPG connections but few refill the cylinder even twice a year.
• On introduction of the PMUY scheme, many households quickly switched to LPG from fuelwood, and reported that their cooking activities became fast and smokeless, they could forgo the need to rise early and the time and effort spent in collecting fuelwood.
• However, the hike in the price of LPG has rendered these advantages short-lived.
• Devising locally acceptable, suitable, and sustainable alternatives to fuelwood is important to secure the forests, wildlife and locals’ livelihoods.
• Work is ongoing with the West Bengal Forest Department and Joint Forest Management Committees to help four villages acquire saplings of high fuelwood value.
  • This is being done on the conditions that they will be native species, prohibited from logging, unpalatable to elephants and will be maintained by locals.
  • Alternatives like efficient cooking stoves, optimized shade tree density in tea plantations, and multi-stakeholder meetings for resource governance are also in the works.

Way Ahead

• LPG price rise, especially over the last decade, could cause socio-ecological crises in places where there are no viable alternatives to fuelwood and socio-economic deprivation is common.
• Future governments must focus on making, and keeping, LPG affordable.
• At the same time, they also need to endeavor to free solid cooking fuels from socio-ecological endangerment.

For example, a national policy on smokeless cooking stoves that consume less fuelwood.

Q1. What is the difference between LPG and PNG?

LPG is Liquefied Petroleum Gas and PNG is Piped Natural Gas. LPG is supplied in liquid form just as the name suggests in cylinders whereas PNG is supplied through a pipeline. LPG is used as a fuel in heating appliances and vehicles, where as PNG is used for cooking (gas stoves) and heating water (gas geysers).

Q2. Where does India import LPG from?

Qatar, Saudi Arabia and United Arab Emirates (UAE) have remained the top three LPG import sources for India since 2012-13.

Source: The socio-ecological effects of LPG price hikes