During the Iran War, there was a significant increase in the prices of not only crude oil but also gas. Due to ample supply of LPG, there has been a significant increase in the prices of gas cylinders during this period. Even the prices of 5 kg gas cylinders, popularly known by names like Appu-Chhotu-Munna, have skyrocketed. Due to which there has been a significant decline in their demand. A Live Mint report quoted at least four distributors as saying that demand for these portable gas cylinders named after children fell when prices doubled after the West Asia War.
These 5 kg cylinders are mainly used by migrant laborers and students, and they can be easily purchased by just showing the Aadhar card. Due to this huge decline in demand, questions are also being raised on the return of workers to the cities, because they had left the cities during the shortage of cooking gas. The decline in demand and increase in prices happened at the same time. In Delhi, the price of these smaller cylinders—technically called Free Trade LPG (FTL) cylinders—rose from Rs 323 in March to Rs 821.50 in June. FTL cylinders are sold by oil marketing companies under brand names like ‘Chhotu’ and ‘Munna’ (IndianOil), ‘BharatGas Mini’ (BPCL) and ‘HP Gas Appu’ (HPCL).
Demand reduced by 80 to 90 percent
Delhi’s LPG distributor said in a media report that the demand for FTL was very high immediately after the crisis started, but now people are not coming back to get their cylinders refilled, especially since May. The demand for FTL cylinders across the country has declined by almost 80 per cent, and in some cases by up to 90 per cent.
FTL Cylinder is a portable cooking gas canister which requires only Aadhaar verification for purchase. It comes in convenient sizes of 2kg and 5kg, making it great for students, migrant workers and people who move frequently. It has been kept in the category of commercial LPG and no subsidy is available on it. Oil Marketing Companies (OMCs) had increased the availability of 5kg cylinders during the war.
On Wednesday, government oil marketing companies (OMCs) reduced the prices of commercial cylinders, and as a result, FTL cylinders will now sell for around Rs 805.50 in Delhi. However, LPG distributors said that the price of FTL cylinder for new connections has been increased by about Rs 160 from Wednesday. The price of new FTL cylinder connection in Delhi is now Rs 1,929.50, whereas in June it was Rs 1,765.50.
considerable shortage
LPG Distributorship Manager Ranjit Singh said in a Live Mint report that both new cylinder sales and FTL refills have decreased significantly in recent weeks. His agency has seen a 40 percent decline in sales. This is important because between March 23 and April 22, approximately 20 lakh (2 million) 5kg FTL cylinders were sold.
There are currently a total of 34 crore (340 million) domestic LPG consumers in the country. It is noteworthy that after stopping commercial LPG supply in early March due to global supply shortage, the government had allowed the sale of FTL cylinders to migrant laborers from March 23.
On June 18, Petroleum Ministry officials had said that about 1,98,000 FTL cylinders were sold in the last three days. Apart from this, the government and OMC are also organizing special camps to increase the availability of these cylinders. The ministry said on June 18 that more than 19,100 FTL cylinders were sold through 1,334 camps in the last three days.
Jagdish Raj, President of Uttar Pradesh Circle of All-India LPG Distribution Federation, said in a media report that due to the huge increase in prices, the very purpose of promoting FTL cylinders among migrant laborers has been defeated. Now we do not get any customers for refilling, because if seen on per kg basis, FTL is now costlier than a 19kg commercial cylinder.
An LPG distributor in Thiruvananthapuram said that there are no new sales of FTL in his agency and refills have reduced by more than 20 per cent. The distributor said that now availability is not a problem. Also, availability of smaller cylinders at some petrol pumps may also impact the demand at LPG agencies. The price of a 19kg commercial cylinder in Delhi is now around Rs 2,930, which was Rs 3,113.50 in June. This means Rs 154.2 per kg, whereas the same gas in FTL costs Rs 161.1 per kg.
impact of migrant workers
One of the main reasons for the decline in demand is the return of migrant workers – such as industrial workers, street food vendors, restaurant workers and vegetable sellers – to their hometowns. Chairman of International Institute for Migration and Development S. Irudaya Rajan said in the Mint report that the fuel crisis and price rise affected every section of the society, including migrants.
Rajan said that due to war and supply problems, businesses, shops and other commercial institutions were closed, due to which people lost their jobs. Everyone was burdened with debt and everyone was affected. Therefore, he had to leave from there. An example of this is Kerala, where laborers and workers returned to their native places during the war.
Gas shortages and high prices also affected businesses dependent on the fuel, leading to the closure of many small businesses, including restaurants and food joints. Ludhiana industrialist and President of Federation of Punjab Small Industries Association Badish Jindal said in a media report that the workers who had left during the war have now started coming back.
Jindal said that about 85-90 percent of industrial workers in Ludhiana have returned to work. However, getting LPG cylinder refill is still a big challenge. Since most of these workers are migrants, many are forced to rely on unauthorized refill channels, where they have to pay Rs 3,500 to Rs 4,000 for a 19kg cylinder.
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