HPCL "Market penetration of HP-Gas"

VIDYALANKAR INSTITUTE OF TECHNOLOGY AND MANAGEMENT,MUMBAI
2014
MARKET PENETRATION OF HP-GAS IN URBAN AND RURAL MARKET
SUMMER INTERNSHIP REPORT
BY RUSHIKESH K. KALE,MMS MARKETING (2013-15)
HINDUSTAN PETROLEUM CORPORATION LIMITED

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SUMMER INTERNSHIP REPORT ON
STRATEGIES TO INCREASE MARKET PENETRATION OF
HP-GAS IN URBAN AND RURAL MARKET
SUBMITTED BY
RUSHIKESH K. KALE
UNDER THE GUIDANCE OF
PROF.PANKAJ PAMANI
A PROJECT SUBMITTED IN PARTIAL FULFILMENT OF MMS TO
VIDYALANKAR INSTITUTE OF TECHNOLOGY
WADALA (EAST), MUMBAI 400 037
JULY 2014
Signature of Faculty Guide Head of Department

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DECLARATION
This is to declare that the study presented by me to Vidyalankar Institute of Technology, in completion of the Master in Management Studies (MMS) under the “Market Penetration of HP-GAS” has been accomplished under the guidance of Prof.Pankaj Pamani.
Place: Mumbai, (Maharashtra)
Date: 30th June 2014 Signature of the Student.

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To be attached on letter head
CERTIFICATE FROM COMPANY
TO WHOM IT MAY CONCERN:
This is to certify that Mr. Rushikesh K .Kale student of MBA of Vidyalankar Institute of Management,Mumbai has completed Summer Project Report titled “Market Penetration Of
HP-GAS in Urban and Rural Market” with us from 2/05/2014 to 30/06/2014.
He has completed the Project Work to our satisfaction.
Place:Mahul,Mumbai Signature of Official Name and Designation of Official
Date:30th June 2014

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ACKNOWLEDGEMENT
My project on “Market Penetration of HP-GAS in Urban and Rural Market” has been a great learning experience. I was exposed to the different areas of research in marketing and gained valuable experience, which I will always recall with a sense of satisfaction and pride.
This is to acknowledge Prof.Pankaj Pamani under whose guidance I have been able to successfully complete this project and effectively come to a very successful conclusion.
A greater share of inputs and data from Mr.Shabbir Azam, Sr.Operations Officer, HPCL,Mumbai made this project report possible to its rightful accuracy.
To all my colleagues who have helped me either directly or indirectly, I am grateful for their valuable inputs. This project would not have been possible without their help.
RUSHIKESH K.KALE
VIT-MMS
(STUDENT)

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TABLE OF CONTENTS
 DECLARATION ............................................................................................................................... 2
 CERTIFICATE FROM COMPANY ................................................................................................ 3
 ACKNOWLEDGEMENT ................................................................................................................. 4
 EXECUTIVE SUMMARY ............................................................................................................... 8
 OBJECTIVE OF STUDY ................................................................................................................ 12
 ABOUT HPCL ................................................................................................................................ 14
 COMPANY PERFORMANCE ....................................................................................................... 15
 VISION ............................................................................................................................................ 16
 MISSION ......................................................................................................................................... 16
 QUALITY POLICY ........................................................................................................................ 16
 PRODUCT COMMITMENT .......................................................................................................... 16
 INTRODUCTION TO LPG ............................................................................................................ 19
 PROPERTIES OF LPG ................................................................................................................... 20
 WHY USE LP GAS? ....................................................................................................................... 22
 USES OF LPG ................................................................................................................................. 23
 LPG MARKET IN INDIA .............................................................................................................. 26
 COMPETITIVE ENVIRONMENT ................................................................................................ 31
 CHALLENGES OF LPG BUSINESS ............................................................................................. 33
 DISTRIBUTION CHAIN OF LPG ................................................................................................. 35
 LPG DISTRIBUTION OF HP-GAS ............................................................................................... 36
 CUSTOMER RETENTION TECHNIQUES .................................................................................. 38
 PLANT OPERATIONS................................................................................................................... 39
 CHARACTERISTICS OF RURAL LPG MARKETS ................................................................... 47

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 KEY CHARACTERISTICS ............................................................................................................ 47
 KEY BARRIERS TO RURAL HOUSEHOLD DISTRIBUTION ................................................. 50
 BARRIERS TO SUCCESSFUL RURAL LP GAS DISTRIBUTION ........................................... 51
 DEMAND SIDE AND COMMUNITY RELATED BARRIERS .................................................. 52
 SUPPLY SIDE AND MACRO STAKEHOLDER BARRIERS..................................................... 54
 RURAL INITIATIVES OF HPCL .................................................................................................. 57
 COMMUNITY KITCHENS: SELLING COOKING TO POOR FAMILIES IN INDIA .............. 57
 HPCL'S RASOI GHAR PROJECT ................................................................................................. 58
 LP GAS PROPAGANDA VANS FOR CREATING GREATER PUBLIC AWARENESS IN INDIA .............................................................................................................................................. 60
 RAJIV GANDHI GRAMIN LPG VITARAN YOJANA (RGGLVY) ........................................... 61
 DEEPAM SCHEME ........................................................................................................................ 63
 RESEARCH METHODOLOGY .................................................................................................... 66
 METHODOLOGY .......................................................................................................................... 67
 SURVEY FOR DOMESTIC SEGMENT ....................................................................................... 67
 SURVEY FOR COMMERCIAL SEGMENT ................................................................................. 68
 SURVEY FOR RURAL SEGMENT .............................................................................................. 70
 DATA COLLECTION .................................................................................................................... 72
 DOMESTIC SURVEY .................................................................................................................... 72
 COMMERCIAL SURVEY ............................................................................................................. 72
 RURAL SURVEY ........................................................................................................................... 73
 DATA ANALYSIS OF SURVEY .................................................................................................. 75
 DATA ANALYSIS OF DOMESTICSEGMENT ........................................................................... 75
 DATA ANALYSIS OF COMMERCIAL SEGMENT ................................................................... 83
 DATA ANALYSIS OF RURAL SEGMENT ................................................................................. 89
 SWOT ANALYSIS ......................................................................................................................... 99
 KEY SUCCESS FACTORS FOR HP-GAS.................................................................................. 101
 QUESTIONNAIRE FOR DOMESTIC SEGMENT ..................................................................... 105

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 QUESTIONNAIRE FOR COMMERCIAL SEGMENT .............................................................. 107
 QUESTIONNAIRE FOR RURAL SEGMENT ............................................................................ 109
 RECOMMENDATIONS ............................................................................................................... 112
 CONCLUSION.............................................................................................................................. 116
 BIBLOGRAPHY ........................................................................................................................... 118
 ABBREVIATIONS ....................................................................................................................... 120

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EXECUTIVE SUMMARY
This project deals with market penetration of HP-GAS LPG business in urban and rural market. The focus is pertaining to the retailing and distribution of LPG. We start with the basics of LPG, its constituents,properties and study plant operations. Following to it the demand supply scenario and the major players in the business in India have been discussed. The supply chain of the LPG business, starting right from procuring, storage, retailing and distribution processes have been explained in details. Next comes the marketing of LPG, which had unique characteristics because of the fact the product cannot be seen either by the producer neither the consumer. Therefore it is important from the company’s point of view to create a perception in the minds of the consumer that of reliability and safety. The market segment consists of Domestic, Commercial and Industrial segment and the marketing as well as the pricing policies varies accordingly. One of the biggest challenges of the business of LPG is the diversion of the cylinders from the Domestic segment to the Commercial and Industrial segment. It is in the interest of the company to orient the distributor and consumers according to the regulations of the business. The motivation arises from the subsidized price of Domestic LPG, which is not the case in Commercial and Industrial segment.Further characteristics of rural market are studied like barriers in rural market penetration of LPG and innitiatives of HPCL for promoting LPG.
Finally, the competitive environment of the business has been analyzed. The Intra Oil Marketing Company’s competition, as well as the competition between Private Oil Marketing Companies has been explained. Again, the threat from one of the most potent substitute of LPG, Piped Natural Gas has been analyzed. Though LPG is a more efficient fuel than Natural gas (higher calorific value), but the advantages in case of Natural gas outweighs the LPG by some amount. Until the infrastructure for distribution of Natural gas is present, Liquefied Petroleum Gas will continue to be in existence, though to make this business viable the abolition of the subsidy regime needs to be implemented.
The ojective of project is increase market penetration of HP-GAS LPG business in urban and rural market.The objective of project is also to create safety awareness of LPG and to identify parameters affectng purchase decision of LPG for domestic and rural segment.This survey undertaken will also help to identify parameters for acceptability of LPG as fuel for heating over conventional fuels for in commercial segment.
The finding of survey will help to understand barriers in market expansion of HP-GAS in Domestic,Commercial and Rural market.Thus will help in formulating intensive marketing strategies for promoting LPG.
Survey was undertaken for three markets:-
1.Domestic Market (Sample Size-100)
2.Rural Market (Sample Size-60)

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3.Commercial Market (Sample Size-40)
Questinnaire was formulated and face to face interviews were done with respondents.
Key Findings:-
For Domestic Segment
1. Fast,correct and convinient refilling is utmost important for customer satisfaction.
2. According to responses noted,timely delivery,periodic safety checks by dealer and prompt service is desired by customer.
3. IT plays a major role creating a bridge between Company-Dealer-Customer.
4. Various customer portals like transparency portal which creates transperency in refilling process,HP-Anytime to assure 24hr prompt service,IVRS system for ease in refilling,DCMS for distributor customer managementsystem.
5. PNG is potential future threat for all OMC’s where customers(51%) are willing to switch to PNG.
6. Periodic safety checks and PDC should be intensified by dealer.
7. Periodic safety awareness campaigns should be undertaken on pilot basis by dealer/company.
8. Advertisement(TV), Print Media and SMS are considered best mode to promote HP-GAS and create safety awareness of LPG.
9. New connection cost should be displayed.
10. Promotion of HP-Gas android aplication for ease in refilling bottles should be done.
For Commercial Segment:-
1. Price variations of LPG has forced many industries to switch over to conventional fuels.
2. Baking(68%) and Hotel(100%) industries are major consumers of LPG where textile industries(27% using LPG) have switched to coal and furnace oil as it is price driven market.
3. Quality of service also is major parameter for customer retention.
4. Several industries(58%) are willing to switch to PNG due its easy affordability and availabilty,while some industries(42%) are reluctant due to additional cost incurred in setting up new installations.
5. Agressive marketing is followed by competitor OMC’s and PMC’s which has affected market share of HPCL in commercial segment.
For Rural Segment:-
1. Lack of awareness of LPG is major barrier for market penetration of LPG where LPG in percieved as unsafe and dangerous(53%).
2. Intense Promotion campaign in rural market should be done.

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3. Education is important parameter in purchase decision of LPG where only 15% households use LPG.
4. Majority(80%) of villagers live in mud house where literacy rate is only 34%,villagers are deprived of basic amenities like water and electricity.
5. Key barrier for LPG penetration is easy avalibility of wood(70%) which is used as major fuel for cooking due to which health issues are faced by 80% of households.
6. Households using LPG have to incur additional cost for transportation to get refill as it is infeasible for dealer to deliver cylinders in remote location with scare demand thus LPG is used as substitute along with wood.
7. Best mode of promotion of LPG as recommended by respondents are haat,fairs and wall painting,road shows to create awareness of LPG.TV Adv is less preffered as most of house hold are below poverty line.
8. Rural respondents are unaware of benifits(70%) of LPG and financial schemes(63%) led by Govt. for promotion of LPG.
9. High acceptibility(60%) for “Rasoi Ghar”-Community Kitchen and 5kg cylinder with mounted stove.
10. 90% of rural households are willing to switch to LPG if 3 A’s affordability, availabilty,awareness are met.
Research identified the following problems among non-users of LPGL:-
Affordability
o High connection cost of Rs 1600 (73%) (for year 2014)
o High recurring cost for refill @ Rs. 453 (51%)
o Options for cooking at low cost/zero cost e.g., firewood ,dung cake
Availability
o Nearest place where LPG is available is town located 10 kms away or more (61%)
Awareness
o Extremely low awareness about actual cost of connection (20%), most believed wrongly ,it cost Rs 2,000 or more
Acceptance barriers (myths)
o Fear of cylinder burst
o Gas leakage fire hazard
o LPG requires electricity

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OBJECTIVE
SCOPE
AND
LIMITATIONS
OF PROJECT

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OBJECTIVE OF STUDY
The motive of this project is to generate the idea of sustainable competitive growth through which various plans of increasing market penetration of HP-GAS in urban and rural market which can be put into action by means of analysis of market potential.
PURPOSE OF THE STUDY
Purpose of making project is to understand the basic fundamentals of LPG industry and to understand the formulation and execution of strategies to sustain and maximize the market penetration and the strategy to increase the market share of HPCL in commercial and domestic market.
 Profit Maximization ensuring growth of company for long term benefit.
 Brand Building.
 Enhance Customer Experience.
 Maximizing promotion.
Methodology: Literature review through secondary data, then expert opinion by interviewing the sales officers within the industry and interviewing the domestic and commercial customers.
Findings and Conclusions: Thus the basic reasons for the success of HP-Gas depends on the seven factors, these are:
 Brand Name
 Brand Image
 Positioning in the mind of consumer
 Quality of parent brand
 Proper and longer support
 Above the Line Promotion
 Below the Line Promotion

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LIMITATIONS OF THE STUDY
Though all the efforts have been made for an in-depth study and delineating the correct picture, but in course of doing so, there were some limitations involved with the methodology adopted.
1. Survey is conducted in some areas of Mumbai and Navi Mumbai region which may not be large enough to generalize on a nationwide scale.
2. A sample size of 100 was taken to fill the questionnaire which again might not be sufficient, to represent the true picture of perception & attitude.
3. Findings are restricted to geographical boundaries of Mumbai region.
4. The time constraint did not allowed interaction with each individual.
5. Respondents can be bias towards some personal liking or disliking which restricts them giving their frank and fair opinion.
6. Since the perception and attitudes varies with each individual so this effect has been reflected in the study

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ABOUT HPCL
HPCL is a Government of India Enterprise and a Fortune Global 500 and Forbes 2000 Company. It holds the Navratna status, and had gross sales of Rs. 215,675 Crores for
FY 2012-13. It has 20.19 per cent marketing share in India among Public Sector Oil Marketing Companies (OMCs) and a strong market infrastructure.
HPCL has a vast marketing network which consists of 13 Zonal offices in major cities and 101 Regional offices. This is facilitated by a Supply & Distribution infrastructure comprising of Terminals, Inland Relay Depots & Retail Outlets, Aviation Fuel Stations, Pipeline networks, LPG Bottling Plants, Lube and LPG Distributorship. The total number of employees is 11,027 as on March 31, 2013. Company continues to invest in innovative technologies to enhance the effectiveness of employees and bring qualitative changes in service, Business Process Re-Engineering exercises and creation of Strategic Business Units (SBU), Enterprises Resource Planning (ERP) implementation, Organizational Transformation, Balanced Score Card, Competency Mapping, benchmarking of refineries and terminals for product specifications, ISO certification of Refineries and Supply Chain Management are some of the initiatives that broke new grounds. This has helped in improving operational and financial efficiencies. The refining capacity has seen a growth from 5.5 MMTPA in FY 1984-85 to 14.8 MMTPA presently. Company turnover has grown from Rs.2687 Crores in FY 1984-85 to an impressive Rs. 215,675 Crores in FY 2012-13.

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COMPANY PERFORMANCE
Hindustan Petroleum Corporation Limited registered gross sales of Rs.2,15,675 Crores for FY 2012-13 as against Rs.1,88,131 Crores in the previous year representing an increase of over 14.6 per cent. The sales of petroleum products in the domestic market were also at an all-time high of 29.07 million tons during FY 2012-13, registering an increase of 4.6 per cent over the previous year, as against the industry growth rate of 3.6 per cent.
Gross sales (Rs. Crores) Operating Costs (Rs.Crores)
2012-13 2011-12 2010-11 2012-13 2011-12 2010-11
PAT(Rs.Crores) Employee Wages and Benefits (Rs.Crores)
2012-13 2011-12 2010-11 2012-13 2011-12 2010-11
In line with the gross sales, the Company’s operating costs increased in current year. Another reason for this trend was the rising cost of input material and higher labour costs. Company incurred higher outgo towards employee wages and benefits to retain the talent pool and on account of implementation of the long term settlement signed with the union.
215,675.5
188,131
142,396
204,339.7
176,826
135,035
1,539.0
911.4
904.7
2,525.5
1,981.8
1,583

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VISION
To be a World Class Energy Company known for caring and delighting the customers with high quality products and innovative services across domestic and international markets with aggressive growth and delivering superior financial performance. The Company will be a model of excellence in meeting social commitment, environment, health and safety norms and in employee welfare and relations.
MISSION
HPCL, along with its joint ventures, will be a fully integrated company in the hydrocarbons sector of exploration and production, refining and marketing; focusing on enhancement of productivity, quality and profitability; caring for customers and employees; caring for environment protection and cultural heritage.
It will also attain scale dimensions by diversifying into other energy related fields and by taking up transnational operations.
QUALITY POLICY
• Total customer satisfaction through quality products by doing it right the first time, every time.
• Ensure consistency of quality, and adherence to time deadlines.
• Strive to achieve excellence in quality through training, motivation, team work and continuous up gradation of technology.
• To take appropriate steps to minimize wastage, increase productivity and optimize the quality of products and services in a cost effective manner
PRODUCT COMMITMENT
• To provide quality products and services this shall reflect in a growing list of satisfied customers.
• To consciously build a quality culture, through employee participation, motivation and training.
• To strive for an eco - friendly environment.

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ENVIRONMENT POLICY
 HPCL aims to have safe, healthy and pollution free environment in and around all refineries, plants, facilities and other premises at all times; in still awareness in these areas, including relevant laws, in all employees, their families and the communities in which they carry out activities.
 The Corporation is committed to conduct its operation in such a manner as compatible with environment and economic development of the community. Its aim is to create an awareness and respect for the environment, stressing on every employee’s involvement in environmental improvement by ensuring healthy operating practices, philosophy and training.

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LITERATURE REVIEW

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INTRODUCTION TO LPG
LP Gas (or LPG) stands for “Liquefied Petroleum Gas”. The term is widely used to describe two prominent members of a family of light hydrocarbons called “Natural Gas Liquids” (NGLs): propane (C3H8) and butane (C4H10). The other members of the Natural gas like ethane and condensates have their own distinctive markets.
The term “liquefied gas” may seem a contradiction in terms since all things in nature are either a liquid or a solid or a gas. Yet, liquidity is the unique character of LP Gas that makes it such a popular and widely used fuel. At normal temperature and pressure, LP Gas is gaseous. It changes to a liquid when subjected to modest pressure or cooling. In liquid form the tank pressure is about twice the pressure in a normal truck tires, which means it is very safe when properly handled.
LP Gas is liquefied to make it easy to transport and store. One unit of liquid has the same energy content as 270 units of gas. As a gas, the container to hold the fuel would be 270 times larger than what is required as a liquid. In other words, LP Gas has density (compactness) for storage and transportation, yet all the benefits of a clean gaseous fuel when used at the burner tip. It is also worth noting that LP Gas is a clean, green fuel, with less harmful emissions and greenhouse gasses than other fuels such as petrol, kerosene, oil and diesel.
LP Gas usually consists of a mixture of propane and butane for standard heating and cooking purposes. Propane starts vaporizing above -45°C, so it is more versatile for general use. Butane starts vaporizing above -2°C and requires either a propane/butane mixture in cold environments or pre-heating as it will not vaporize as readily as propane. LP Gas can also be used in specialized applications that require a more rigorous specification. Examples include food processing, aerosol propellants and automotive fuel.
LP Gas is a derivative of two large energy industries: the processing of natural gas liquids and the refining of crude oil.
Natural gas processing:-
When gas is drawn from the earth, it is a mixture of several gases and liquids. Commercial natural gas is mainly composed of methane. However, it also contains ethane, propane and butane in accordance with the specifications for natural gas in each country in which it is distributed. Therefore, before natural gas is

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marketed, some NGLs, including LP Gases (propane and butane) are separated out, depending on the “wetness” of the gas produced: NGLs represent 1 to 10% of the unprocessed gas stream.
Some NGLs are also trapped in crude oil. In order to stabilise the crude oil for pipeline or tanker distribution, these “associated” or “natural gases” are further processed into LP Gas. Worldwide, gas processing is the source of approximately 60% of LP Gas produced.
Crude oil refining:-
In an oil refinery, LP Gases are produced at various stages: atmospheric distillation, reforming, cracking and others. The LP Gas produced will be between 1 and 4% of crude oil processed. This yield will depend on the type of crude oil, the degree of sophistication of the oil refinery and the market values of propane and butane compared to other oils products. Worldwide, refining is the source of approximately 40% of LP Gas produced.
Like all other hydrocarbons obtained from oil and gas, LP Gas has its own distinct marketing advantages and can perform nearly every fuel function as the primary fuels from which it is derived. Furthermore steadily growing throughout the world and forecasts show this trend will continue.
Properties of LPG
LPG is a mixture of commercial butane and commercial propane having both saturated and unsaturated hydrocarbons. LPG marketed in India is be governed by Indian Standard Code IS-4576.
PHYSICAL PROPERTIES AND CHARACTERISTICS
DENSITY
LPG at atmospheric pressure and temperature is a gas which is 1.5 to 2.0 times heavier than air. It is readily liquefied under moderate pressures. The density of the liquid is approximately half that of water and ranges from 0.525 to 0.580 @ 15 deg. C.
Since LPG vapour is heavier than air, it would normally settle down at ground level/ low lying places, and accumulate in depressions.
VAPOUR PRESSURE
The pressure inside a LPG storage vessel/ cylinder will be equal to the vapour pressure corresponding to the temperature of LPG in the storage vessel. The vapour pressure is dependent on temperature as well as on the ratio of mixture of hydrocarbons. At liquid full condition any further expansion of the liquid, the

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cylinder pressure will rise by approx. 14 to 15 kg./sq.cm. for each degree centigrade. This clearly explains the hazardous situation that could arise due to overfilling of cylinders.
FLAMMABILITY
LPG has an explosive range of 1.8% to 9.5% volume of gas in air. This is considerably narrower than other common gaseous fuels. This gives an indication of hazard of LPG vapour accumulated in low lying area in the eventuality of the leakage or spillage.
The auto-ignition temperature of LPG is around 410-580 deg. C and hence it will not ignite on its own at normal temperature.
Entrapped air in the vapour is hazardous in an unpurged vessel/ cylinder during pumping/ filling-in operation. In view of this it is not advisable to use air pressure to unload LPG cargoes or tankers.
COMBUSTION
The combustion reaction of LPG increases the volume of products in addition to the generation of heat. LPG requires upto 50 times its own volume of air for complete combustion. Thus it is essential that adequate ventilation is provided when LPG is burnt in enclosed spaces otherwise asphyxiation due to depletion of oxygen apart from the formation of carbon-dioxide can occur.
ODOUR
LPG has only a very faint smell, and consequently, it is necessary to add some odourant, so that any escaping gas can easily be detected.
Ethyl Mercaptan is normally used as stenching agent for this purpose. The amount to be added should be sufficient to allow detection in atmosphere 1/5 of lower limit of flammability or odour level 2 as per IS: 4576.
COLOUR
LPG is colourless both in liquid and vapour phase. During leakage the vapourisation of liquid cools the atmosphere and condenses the water vapour contained in them to form a whitish fog which may make it possible to see an escape of LPG.
TOXICITY
LPG even though slightly toxic, is not poisonous in vapour phase, but can, however, suffocate when in large concentrations due to the fact that it displaces oxygen. In view of this the vapour possess mild anesthetic properties.

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WHY USE LPG?
LP Gas is a modern and safe energy which can be used anywhere. Other energy sources are available, so why chose LP Gas over the alternatives? Many good reasons include:
Accessible
LP Gas can be accessible to everyone everywhere today without major infrastructure investment, particularly in areas of developing countries with no access to modern, grid-based energy. Nothing needs to be invented and there are enough reserves to last many decades.
Clean
LP Gas is very clean burning and has lower greenhouse gas emissions than any other fossil fuel when measured on a total fuel cycle. Originating mainly from natural gas production, it will not contaminate soil or aquifers in the event of a leak.
Convenient
LP Gas is a multi-purpose energy. There are more than a thousand applications, from cooking, heating, air conditioning and transportation, to cigarette lighters and even the Olympic torch.
Efficient
LP Gas is cost-effective, since a high proportion of its energy content is converted into heat. LP Gas can be up to five times more efficient than traditional fuels, resulting in less energy wastage and better use of our planet’s resources.
Portable
LP Gas can be transported, stored, and used virtually anywhere in the world. It does not require a fixed network and will not deteriorate over time.
Safe
LP Gas compared to other fuels has an excellent safety record worldwide when handled properly and is non-toxic.

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USES OF LPG
Rural heating Predominantly in Europe and rural parts of many countries, LPG can provide an alternative to electricity and heating oil (kerosene). LPG is most often used where there is no access to piped natural gas. LPG can be used as a power source for combined heat and power technologies (CHP). CHP is the process of generating both electrical power and useful heat from a single fuel source. This technology has allowed LPG to be used not just as fuel for heating and cooking, but also for de-centralized generation of electricity. LPG can be stored in a variety of ways. LPG, as with other fossil fuels, can be combined with renewable power sources to provide greater reliability while still achieving some reduction in CO2 emissions. Motor fuel When LPG is used to fuel internal combustion engines, it is often referred to as auto gas or auto propane. In some countries, it has been used since the 1940s as a petrol alternative for spark ignition engines. In some countries, there are additives in the liquid that extend engine life and the ratio of butane to propane is kept quite precise in fuel LPG. Two recent studies have examined LPG-fuel-oil fuel mixes and found that smoke emissions and fuel consumption are reduced but hydrocarbon emissions are increased. The studies were split on CO emissions, with one finding significant increases, and the other finding slight increases at low engine load but a considerable decrease at high engine load. Its advantage is that it is non-toxic, non-corrosive and free of tetraethyl lead or any additives, and has a high octane rating. It burns more cleanly than petrol or fuel-oil and is especially free of the particulates from the latter. LPG has a lower energy density than either petrol or fuel-oil, so the equivalent fuel consumption is higher. Many governments impose less tax on LPG than on petrol or fuel-oil, which helps offset the greater consumption of LPG than of petrol or fuel-oil. However, in many European countries this tax break is often compensated by a much higher annual road tax on cars using LPG than on cars using petrol or fuel-oil. Propane is the third most widely used motor fuel in the world. 2011 estimates are that over 13 million vehicles are fueled by propane gas worldwide. Over 20 million tonnes (over 7 billion US gallons) are used annually as a vehicle fuel. Not all automobile engines are suitable for use with LPG as a fuel. LPG provides less upper cylinder lubrication than petrol or diesel, so LPG-fueled engines are more prone to valve wear if they are not

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suitably modified. Many modern common rail diesel engines respond well to LPG use as a supplementary fuel. This is where LPG is used as fuel as well as diesel. Cooking According to the 2011 Census of India, 21.5% of Indian households or 70 crores Indian households used LPG as cooking fuel in 2011, which is supplied to their homes by OMC’s.76.64% of such households were from urban India making up 48% of urban Indian households as compared to a usage of 5.7% only in rural Indian households. LPG is subsidised by the government. Increase in LPG prices has been a politically sensitive matter in India as it potentially affects the urban middle class voting pattern. LPG was once a popular cooking fuel in Hong Kong; however, the continued expansion of town gas to buildings has reduced LPG usage to less than 24% of residential units. LPG is the most common cooking fuel in Brazilian urban areas, being used in virtually all households. Poor families receive a government grant ("Vale Gás") used exclusively for the acquisition of LPG.
Comparison with natural gas LPG is composed primarily of propane and butane, while natural gas is composed of the lighter methane and ethane. LPG, vaporised and at atmospheric pressure, has a higher calorific value (94 MJ/m3 equivalent to 26.1kWh/m3) than natural gas (methane) (38 MJ/m3 equivalent to 10.6 kWh/m3), which means that LPG cannot simply be substituted for natural gas. In order to allow the use of the same burner controls and to provide for similar combustion characteristics, LPG can be mixed with air to produce a synthetic natural gas (SNG) that can be easily substituted. LPG/air mixing ratios average 60/40, though this is widely variable based on the gases making up the LPG. The method for determining the mixing ratios is by calculating the Wobbe index of the mix. Gases having the same Wobbe index are held to be interchangeable. LPG-based SNG is used in emergency backup systems for many public, industrial and military installations, and many utilities use LPG peak shaving plants in times of high demand to make up shortages in natural gas supplied to their distributions systems. LPG-SNG installations are also used during initial gas system introductions, when the distribution infrastructure is in place before gas supplies can be connected. Developing markets in India and China (among others) use LPG-SNG systems to build up customer bases prior to expanding existing natural gas systems.

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Environmental effects Commercially available LPG is currently derived from fossil fuels. Burning LPG releases CO2, an important greenhouse gas, contributing to global warming. LPG does, however, release less CO2 per unit of energy than that of coal or oil. It emits 81% of the CO2 per kWh produced by oil, 70% of that of coal, and less than 50% of that emitted by coal-generated electricity distributed via the grid. Being a mix of propane and butane, LPG emits less carbon per joule than butane but more carbon per joule than propane. LPG can be considered to burn more cleanly than heavier molecule hydrocarbons, in that it releases very few particulates.

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LPG MARKET IN INDIA
Demand Supply Scenario:-
TOP 5 CONSUMERS-DOMESTIC
LPG DEMAND AND GROWTH
India is fourth largest LPG consumable after USA, China and Japan.India is also third largest consumable after China and USALPG in India is largely a regulated market. Pricing and allocation of distributor bodies is decided by corresponding bodies. Demand for LPG in year 2012-13 was 14.8 MMT Indigenous Production in 2012-13was 9516 TMT Imports @29% of total LPG Demand. This supply consisted of 55% from PSU OMC’s, 25% from Essar and RIL and remaining 20% from imports. In year 2012-13 demand stood at 90-95% of supply. On January 1, 2013 there were 181 bottling plants across India 49 % owned by IOCL, 27 % by HPCL, 25 % by BPCL. Bottling plants had capacity of 8987 MMTPA as on April 2012.There were 9366 distributers of LPG on same date with 73 % presence in urban area and 27% in rural area. Demand for LPG is growing at rate of 6 % per annum where supply is not constant and gap is filled by imports.
China
USA
India
Japan
Mexico
17180
14873
11270
7605
7027
Growth
7-8
8-9
9-10
10-11
11-12
12-13
10052
10531
11333
11778
12746
13700
Growth

27
Consumption of Major Petroleum Products in India (During 2012-13) ( ' 000 Tonnes) States/UTs/ Outside Territories Nephtha LPG MS SKO ATF HSDO LDO* FO LSHS/HHS Lubes & Greases Others Total
Andhra Pradesh 102
308 340
641 44
2989 28
319 107
47 213
5138
Arunachal Pradesh 0
4 14
14 2
57 1
0 0
2 4
98
Assam 5
65 54
268 51
355 2
69 25
9 127
1030
Bihar 57
125 157
652 7
1609 136
378 67
45 148
3381
Delhi 0
332 476
243 649
1242 49
36 27
27 99
3180
Goa 253
21 34
28 26
189 5
161 0
5 15
737
Gujarat 590
313 416
829 67
2763 185
506 1669
43 970
8351
Haryana 0
133 150
172 30
1533 47
251 232
19 108
2673
Himachal Pradesh 0
36 27
46 0
207 3
12 8
4 20
362
Jammu & Kashmir 0
41 48
121 14
207 7
11 1
4 28
482
Karnataka 168
209 338
510 87
2007 21
379 131
36 125
4011
Kerala 169
142 233
289 65
1309 6
199 214
26 162
2814
Madhya Pradesh 4
199 225
514 27
2072 24
305 49
35 271
3725
Maharashtra 749
733 759
1563 547
4041 322
1386 947
131 766
11944
Meghalaya 0
6 19
20 0
100 0
0 0
2 8
155
Manipur 0
8 9
22 1
26 0
0 0
0 17
83
Mizoram 0
6 6
8 0
21 0
0 0
0 6
47
Nagaland 0
5 10
15 1
27 0
0 0
1 5
64
Orissa 127
44 76
235 11
683 27
309 12
19 79
1622
Punjab 49
182 336
358 70
1960 22
411 386
28 189
3991
Rajasthan 317
159 205
356 45
2353 39
117 110
24 206
3931
Sikkim 0
2 0
12 0
10 1
2 0
0 2
33
Tamil Nadu 458
345 373
696 150
2983 47
903 180
71 288
6494
Tripura 0
5 6
29 6
36 0
0 0
1 6
89
Uttar Pradesh 919
506 408
1160 96
4166 88
466 144
55 337
8345
West Bengal 47
216 157
793 126
1757 150
271 0
60 249
3826
States 4014
4145 4723
8801 1996
32945 1060
6491 4309
694 7431
76609
Andaman & Nicobar Islands 0
1 2
5 3
48 0
0 0
1 1
61
Chandigarh 0
22 46
19 28
55 4
6 6
2 16
204
Dadra & Nagar Haveli 0
2 4
3 0
67 2
7 0
3 2
90
Daman & Diu 0
1 4
5 0
15 1
3 0
0 3
32
Lakshadweep 0
0 0
0 0
5 0
0 0
0 0
5
Pondicherry 0
9 13
15 0
114 1
25 0
4 7
188
UTs 0
36 69
47 31
304 8
41 6
10 29
580
Bhutan 0
2 2
5 1
15 1
3 0
0 6
35
Nepal 0
0 0
0 0
0 0
0 0
0 0
0
Outside Territories 0
2 2
5 1
15 1
3 0
0 6
35
India 4014
4182 4794
8853 2028
33264 1069
6536 4315
704 7466
77224
Source:-Indiastats.com

28
Tabular distribution of Type of Fuel Used by households
(Source:-Census India 2011)
2001
2011
Total
Rural
Urban
Total
Rural
Urban
Firewood
100,842,651
88,687,850
12,154,801
120,834,388
104,963,972
15,870,416
Crop Residue, Cow dung, Coal, Lignite, Charcoal
41,946,466
37,289,745
4,656,721
45,023,278
40,248,372
4,774,906
Kerosene
12,528,916
2,262,078
10,266,838
7,164,589
1,229,476
5,935,113
LPG/PNG
33,596,798
7,918,755
25,678,043
70,422,883
19,137,351
51,285,532
Any Other
2,418,879
1,957,592
461,287
2,450,564
1,852,952
597,612
Geographical depiction of the Indian LPG infrastructure shows 17 well spread out Refineries with a capacity to produce 5.5 million tons of LPG per annum and 11 Fractionators in and around the gas fields and the natural gas pipelines producing another 2.2 million metric tons of LPG. It also has 7 logistically located LPG Import Facilities, capable of handling up to 5 MMTPA.
The world’s largest LPG pipeline of 1250 Kms moves product from the west coast to the land locked northern region and is capable of handling 2.2 Million tons per annum
On the downstream side, it has a network of over 400 bottling plants with a capacity to bottle around 11 MMTPA of LPG and well supplemented with Road and Rail Tankers to move product from supply sources to bottling plants.
Country’s first 60,000 Mts Cavern Storage facility is under construction by a Joint venture company of HPCL and Total Elf Fina, which would further augment the import infrastructure.
With the above infrastructure, the country is fully equipped to handle the demand for the next 5 years.

29
LPG is distributed in following markets:-
The LPG is being distributed in cylinders of various sizes
 Domestic: - 5kg and 14.2 kg.
 Commercial: - 19 kg.
 Industrial: - 35 kg,47.5 kg
LPG for domestic customers is supplied at a subsidized rate and for industrial and commercial rate is market determined. These differences in pricing scheme often lead to black marketing but companies are now a day’s vigilant enough to inhibit this practice.

30
Major Players in LPG Market
In India, share of LPG retailing largely depends on LPG producing capacities of its refineries.
IOCL has largest number of refineries and largest capacity for producing LPG. It leads market with 52 % market share, 25 % by HPCL & 23 % by BPCL.In PMC’s major players are RIL and Essar. These two companies generate 90-95 % revenue from commercial sale. The combined LPG production capacity of RIL and Essar is 3 % of total indigenous production LPG production capacity of India.
52%
25%
23%
Number of Distributors
IOCL
HPCL
BPCL
63
38
35
IOCL
HPCL
BPCL
0
10
20
30
40
50
60
70
Number of LPG customers (in million)
as on 1.04.2013

31
COMPETITIVE ENVIRONMENT
Business Rivalries
There are mainly two categories of competitions existing in Indian LPG industry. They are as follows:
1. Inter OMC competition
2. Inter OMC-PMC competition
Inter OMC competition:-
OMC’s is India is seen as the facilitator to the nation’s development. Hence, apart from churning profit for sustainable existence and growth, it has to operate in accordance with the nation’s interest. That’s why OMC’s are regulated such that to avoid unwanted friction among themselves and concentrate their whole energy to nation’s cause. So, there exists a special type of competition among the OMC’s of India.
In domestic segment, OMC has to sell its product at a price decided by the government. So, there exists no scope of price war, which leaves the OMCs to compete on market share. But, to avoid unwanted friction and hence deadweight loss to the society, the regulatory body, MOP&MG tries to maintain the optimum number of dealers in an area. In order to that the number of dealerships of a company is decided by the committee in accordance to their market share and presence in the region. Hence, chances of competition for market share in domestic segment are also very limited. Though, in industrial segment, with lack of price regulation and hence better scope for margin there is an intense competition in the form of:
1. Price
2. Service
3. Promptness in delivery
4. Hours of catering or working hours
OMC-PMC competition
PMC, due to subsidized price prevailing in the domestic segment has not shown any interest to compete with the OMCs. But, in industrial segment it is giving OMCs run for their money.
Threat from Substitutes
Today, PNG is considered to be most eligible fuel to replace LPG. Few, properties of PNG which are regarded as giving it an edge over LPG are follows:
 PNG is Convenient

32
 24 hours uninterrupted gas supply
 No changing or handling of gas cylinders
 No more last minute emergency
 Make payments after you consume, through banks, drop boxes, ECS, Net, etc.
 PNG is economical, works out to be up to 10% cheaper than LPG,
 14.2 kg. LPG is equivalent to 18 units of Natural Gas shown in meter. At present, price of LPG is Rs. 455/- but weconsume Gas costing Rs. 205/- only, saving Rs. 250/- (approx.) every time.
PNG is Safe:
Natural Gas catches fire only when it forms a 5-15% mixture with air whereas LPG catches fire when it forms 2% or above mixture with air.
 Supply designs, executions and operations are being done as Per International best Practices.
PNG is Clean:
 Being a gaseous fuel, very clean compared to any other fuel with more than 94% combustible particles.
 Burns with a flame always hence, no blackening of vessels.
 Sulphur content less than 10 PPM. Most preferred fuel in vehicles in Mumbai today.
 Contribution for a cleaner society.
PNG is versatile:
 Apart from cooking, other appliances like geyser, air conditioner, vehicles etc. can be used on Natural Gas.

33
CHALLENGES OF LPG BUSINESS
Supply & accessibility
In order to meet the increasing demand of LPG by domestic as well as auto fueling sectors the country needs additional LPG production capacity, adequate transportation (pipelines & rail tank wagons), and distribution network.
During the calendar year 2008, the actual sale of LPG was 11820 TMT against the total indigenous LPG availability of 9228 TMT. The shortfall was made up by importing LPG to the tune of 2759 TMT. For the year 2014, Total LPG imports of 3112 TMT have been planned against the projected demand of 12570 TMT at a growth of 6%.
Supply of reliable cylinders
Another challenge pertaining to LPG distribution is assuring the reliable supply of refill cylinders. For small and remote markets, refills may be delivered once a week or once every other week. For those users that do not keep a second cylinder, this could mean going without fuel for as long as two weeks. Signing up for two cylinders to avoid running out of cooking fuel would further increase the start-up cost of LPG service. Again, this infrequent delivery of refill cylinders serves as a disincentive against switching entirely to LPG.
Cylinder management
As we know that LPG has to be stored under pressure, metal cylinders are required. To cover the cost of cylinder manufacture, an initial deposit fee is required. The combination of the start-up cost and the cash outlay at each refill (which typically cannot be broken up into smaller installments) presents a serious barrier to the uptake and regular use of LPG by low-income households.
Import challenges
The LPG import requirement during the year 2013was estimated to be about 7.7 MMT. The stretched import capacity of the industry at present is about 414 TMT/month which equals to approximately 5.0 MMTpa. International factors such as seasonal variations, changes in international politics cause the problems.
Diversion of LPG cylinders
The reason for diversion of domestic cylinders by distributors is because the domestic LPG is subsidized. The selling price of domestic cylinders is less as compared to the commercial cylinder selling price which is fixed on the actual Import parity price. There is a wide difference between the

34
domestic and commercial rates. Due to this most of the supply intended to go to domestic consumers are transferred to commercial consumers which results in shortage for above said consumer base.
Affordability
The economically disadvantaged face the problems of high first costs of LPG (connection and equipment), and the lumpiness of relatively high refilling bills, and loans are difficult to service without financial returns from the investment.
On comparing the fuel rates for different fuels, we see that the expenditure occurred for using LPG is much more costly as compare to others. For example LPG stoves are required to be designed to operate at 60 percent efficiency or higher, field measurements show efficiencies considerably lower than the design specifications. If we assume 50 percent stove efficiency for LPG, 35 percent for kerosene in wick stoves, and 40 percent for kerosene in high-pressure stoves (where kerosene is gasified before combustion).a 14.2 kg cylinder of LPG is equivalent to 21 litres of kerosene as liquid and 19 litres gasified kerosene. Expressed in rupees per mega-joule (MJ) of energy delivered, LPG is more expensive than kerosene for low income group population.
Pricing policies
These are a challenge, particularly because of the subsidies already offered. The subsidies do not reach most of the poor as they are not yet users of LPG, there is diversion of subsidized LPG from domestic to other uses, and there is also a heavy burden on the central exchequer.
As per the Subsidy Scheme notified by the Government, OMCs are only allowed to market subsidized domestic LPG. The present total subsidy on domestic LPG marketed by OMCs is:-Rs.7.94 per Kg (Rs.112.77 per 14.2 Kg cylinder).
Of this, Government is paying Rs.2.86 per Kg (Rs. 40.65 per 14.2Kg cylinder) and Oil Companies are incurring loss of the balance Rs.5.08 per Kg (Rs.72.12 per 14.2Kg cylinder).
Out of the loss incurred on domestic LPG sales, as per the subsidy sharing mechanism, ONGC, GAIL are sharing 1/3rd and the rest is borne by OMCs. If producers like RIL, ONGC, GAIL and OIL are to be allowed to market subsidized domestic LPG, they would have to follow price regulation and bear losses. Again, LPG producers, especially private producers, may not be interested in selling subsidized domestic LPG under the subsidy scheme. It also possesses a challenge for the government to ensure the supply of subsidized product to domestic consumers & prevent its diversion to non-domestic purposes.

35
DISTRIBUTION CHAIN OF LPG

36
LPG DISTRIBUTION OF HP-GAS
From the storage facilities, LPG is directly distributed to bulk industrial purchasers via large bulk road tankers. For the domestic customers, LPG is distributed in packed form through dealers. Dealer holds the stock of filled cylinders. When the customer’s LPG cylinder is emptied, it is replaced by the local operating dealer at the customer’s location itself. The dealer recovers the cost of transporting cylinders from commission on a per refill basis. A group of dealers in a given area receive the filled cylinders from the designated bottling plant. A dealer sends the empty cylinders to the required bottling stations via truck. These bottling plants take back the empty cylinders and load the truck with the filled
LPG SUPPLY CHAIN

37
ones. The filled cylinders are then sent back to the dealer. The various bottling plants in turn receive the LPG from storage facilities with the use of pipe lines and tankers.
Process of refilling cylinder

38
CUSTOMER RETENTION TECHNIQUES
The LPG business is mostly self-propelled and doesn’t need much marketing measures. In the domestic category, the distributor represents the company and mostly the consumer chooses that distributor which is closest to his/her locality. Though there are a few factors which improve the service level of the business:
Again, few OMCs started taking measures to improve consumer satisfaction by providing home delivery service of household goods by collaborating with various companies for providing cooking items like ISI stoves,frying pans,tea powder and other retail goods called as Allied Retail Business(ARB). The commission is shared amongst the distributor and the company in the ratio of 70:30.
For the industrial and consumers the reliability of providing the LPG cylinders in normal as well as emergency times is of utmost priority, as the opportunity cost is huge in industry. Another important aspect is the price of LPG, as the prices charged by the company is not regulated and hence can be tinkered with
JI HAAN
IVRS,DCMS
PREFFERED TIME DELIVERY
TRACK YOUR REFILL
HP ANYTIME
FAST, CORRECT AND CONVINIENT REFILL
STAFF BEHAVIOUR

39
PLANT OPERATIONS
OPERATIONS OF THE PLANT:
Following activities are to be carried out by the skilled manpower at the Plant as part of Operations:
1. Bulk LPG receipt by pipeline, round the clock
2. Bottling operations inthree shift
3. Road tanker loading/unloading operation
Major scope includes receipt of bulk LPG by pipeline, storage of product, receipt of empty cylinders from dealers/repairers, new cylinders from manufacturers, cylinder bottling operations, receipt/dispatch of bulk LPG by road tankers to customers/other LPG Plants, dispatch of filled cylinders to dealers, receipt/issue of regulators and allied equipment to dealers, and all activities connected with operation, maintenance and safety of the Plant.
Pipeline receipt and bottling operations shall be on 6-day week basis. Public/National Holidays will be limited to a maximum of 12 days.
A. RECEIPT OF BULK LPG
Regular mode of bulk LPG receipt is by pipeline. However, there may be some occasional receipt by road tankers too.

40
Bulk LPG Receipt by Pipeline
In case the product is received by pipeline from Refinery, Shift Supervisor has to co-ordinate with Refinery coordinator for the expected time of receipt of product, flow rate, expected time of completion etc. During the course of pipeline transfer, continuous interaction has to be maintained through walkie-talkie/telephone or any other means, with the HMEL Refinery personnel. Quantity of product received shall be basis the Custody Transfer Flow meter. Initial & final readings of quantity, density and other parameters from the flow meter shall be jointly recorded with the Refinery Co- coordinator, before and after each transfer. After each pipeline transfer, Shift Supervisor shall compare the metered quantity with the actual quantity received and any abnormal variation beyond acceptable Industry norms shall be brought to the notice of HPC. In case of any dispute, HPC shall take up with the Refinery, however the outcome of such exercise shall be binding on the Contractor/Agency.
Shift Supervisor has to maintain records as per HPCL prescribed format for Pipeline Transfer operations.
B. STORAGE OF BULK LPG
Storage of bulk LPG will be in the Mounded Storage Vessels provided in the Plant. Gauging of the storage tanks are to be carried out by the Shift Supervisors every day at start and close of Operations (Opening & Closing gauges). Gauging of tank comprises of recording of level, density, pressure & temperature and the readings are to be recorded in gauge books as per prescribed format of HPCL.
Storage Vessels are provided with two types of gauging systems for product level, viz., Servo and Radar systems. While readings from both the gauges are to be recorded in the gauge books, stock calculations will be based on the Radar gauge. Servo gauge shall be only for cross checking purpose, and in case of any difference, both the gauges are to be checked and calibrated.
All the gauging equipment’s as well as temperature & density measuring instruments must be calibrated periodically as required and must have valid calibration certificates at all times.
At the end of the day, stock loss/gain for the day’s operations is to be calculated & logged. Presently, the stock calculations are integrated with ERP system (JD Edwards) and has to make all such entries necessary for making the stock calculations.

41
Water draining from the Storage Vessels has to be regularly carried out by the skilled worker as per HPC’s procedure, taking all safety precautions.
C. BOTTLING OPERATIONS
Receipt of Cylinders
a. Shift Supervisor/worker shall receive empty cylinders from HPC, their distributor network and Manufacturers/Repairers authorized by HPCL. All the cylinders so received shall be checked and identified as per IS:13258 under the following categories:
i) Good/usable cylinders
ii) Cylinders due for mandatory testing
iii) Cylinders requiring cold/hot repairs
iv) Defective and leaky cylinders
v) Spurious cylinders
vi) Cylinders not belonging to HPC
Shift Supervisor shall maintain necessary record of the cylinder receipts as per HPCL’s directive.
b. In case of spurious/non-HPC cylinders, immediate information shall be given to HPC Officer and necessary action to be taken on his advice. Proper records with acknowledgement from Parties bringing such cylinders will have to be maintained by the Shift Supervisor.

42
c. Cylinders due for mandatory testing shall be stacked separately.
d. Repairing of defective and leaky cylinders (with Valve & Pin leak) shall be carried out before taking the cylinders for filling.
e. Cylinders requiring hot repairs shall be kept separately and dispatched to outside Parties as per advice of HPC.
Purging of Cylinders
Worker shall carry out purging of the following types of cylinders received. Purging shall be carried out according to laid-down procedure in that regard.
(i) New cylinders received at the Plant
(ii) Cylinders tested inside the Plant
(iii) Cylinders received after mandatory testing/hot repair
Filling of LPG Cylinders
a) Worker shall fill good and usable empty cylinders conforming to IS-3196 to the extent of the capacity of each such LPG cylinder. Variation in the net product weight shall be within the following limits for respective cylinders:

43
5.0 Kg cylinders 50 gm
b) All filled LPG cylinders which contain less/more quantity of product than as mentioned in (a) above and shall be filled/evacuated so as to bring them to the prescribed standard weight.
c) All filled cylinders shall be checked for any Pin leak, Bung Leak, O-ring leak and Body leak with the help of equipment provided, as per the specifications, and segregated for repairs as follows:
Pin leak: Evacuation of product, depressurization and replacement of valve
Bung leak: Evacuation of product, depressurization, removal of valve, cleaning the bung threads and refixing the valve
O-ring leak: Replacement of O-ring
Body leak: Evacuation of product, depressurization, removal of valve,degassing and segregation as scrap
d) The repaired cylinders shall be rechecked for any defects and if OK, sent for further operations. If found leaky, they are to be repaired as mentioned in (c) above.
e) All filled cylinders passing the QC tests shall be capped, sealed, fixed with neck labels and sent for market dispatch or stacked in Storage Shed as required.
f) Over and above the 100% Quality Control Checks carried out as above, Statistical Quality Control shall be carried out on 2% of filled cylinders ready for dispatch, and records maintained.
During SQC following checks are to be done and records as per HPCL format has to be maintained:

44
i) Checking of gross weight of the cylinder and noting the difference of net weight of LPG from the specified weight (14.2 Kg/ 19.0 Kg/ 35.0 Kg / 47.5 Kg) and segregating the cylinder in case of variation of weight in comparison with allowable limit as mentioned in clause no a).
ii) Checking of cylinder for any valve leakage or pin leakage by using CVT and segregating the cylinder in case any leakage is observed.
iii) Re-sealing of checked cylinder in case found OK in SQC.
g) The Quality Control equipment used in Filling operations, viz., Check Scale, Adjustment Scale, Pin/Bung Leak Detector, O-ring Leak Detector, SQC Check Scale, etc., shall be frequently calibrated (at the start of the shift and in between if required), without interrupting the operations. Water in the Test bath and Washing Unit shall be replaced as and when necessary (at least once in a shift) for ensuring clear water/good visibility.
h) Data collection system is provided for collection and analyzing the data on Filling operations. Necessary monitoring, data analysis and corrective actions need to be taken on regular basis for ensuring quality. Regular reports/graphs on the same shall be submitted to HPC in required formats.
Dispatch of Filled LPG Cylinders
a)Worker will be responsible regarding dispatch/ delivery of filled LPG cylinders as per advice.
b)Filled cylinders so dispatched should be in sound condition with correct weight and should not have any leaks. The cylinder should meet IS 3196 and should be capped, sealed and provided with neck label and the tare weight shall be clearly visible.
c)Shift Supervisor/worker shall facilitate loading/unloading of LPG filled/empty cylinders from trucks. The unloading/loading of cylinders from and into the truck will be done by the crew of packed transporters arranged by HPC.
d)In case if any of the cylinder so filled at Plant meets with any accident enroute, on truck, at dealers premises, during delivery to customers or at customers’ premises, Shift

45
Supervisor/workers will render all assistance for investigation and establishing the reasons for the accident.
Storage of Filled LPG Cylinders
a. If there is no truck availability for loading of good filled cylinders, the cylinders shall be stacked in the Filled Cylinders Storage Shed within the earmarked place as per rules prescribed.
b. In no case, cylinders not qualifying for dispatch to markets shall be stacked in the Shed and agency will ensure that such type of cylinders are corrected immediately when noticed.
Mandatory testing & painting of Cylinders
Plant is provided with equipment for mandatory testing and painting of cylinders.
HPC shall place a separate order for mandatory testing and painting of cylinders at the Plant. Manpower provided by the operator shall facilitate execution of the work as per detailed procedure and promptly bring any deviations with respect to the tested cylinders, to HPC’s notice.
Receipt & Storage of Regulators & Valves
a. Worker shall receive and store the new regulators and valves supplied by manufacturers and defective regulators returned by dealers. Worker shall deliver the new regulators to HPC distributors as per HPC’s advice in that regard. Proper records shall be maintained by the agency for the regulators and valves received, stored and dispatched and the balance stock at the Plant. Defective equipment shall be stored and accounted for separately.
b. Defective Regulators returned by the dealers shall be checked for defects as per HPC’s standard procedure and then only accepted.

46
c. Spurious/non-HPC regulators shall be immediately reported to resident HPC Officer and necessary action taken as per his advice. Proper records with acknowledgement bringing such regulators shall be maintained. Based on HPC’s advice, necessary debit notes will have to be raised by the Operator. In case of any delay in informing HPC of the receipts (or) regulators found with no proper records, Operator is liable to penalties at applicable rates.
d. Defective Valves generated in the Plant shall be salvaged by the Operator as per HPC’s standard procedure. Good valves shall be reused and defective valves stored separately.

47
CHARACTERISTICS OF RURAL LPG MARKETS
This section of the report provides a general description of some of the major characteristics of supply of LP Gas to rural households, especially those to be found in the less developed and more remote regions of the world. Many characteristics are considered, from geographic, to profile of households, cultural issues, governmental, political, regulatory and economic.
(Source:-CensusIndia2011)
Key Characteristics:-
Location and Density
Probably the first and most obvious characteristics of rural LP Gas distribution are the location of households, the topography of the locations and the density of dwellings per square kilometre. Rural poor households are found in limitless settings, from being clustered in small hamlets to isolated homes perched on mountain sides or scattered across deltas at major river mouths or wetland regions where river-craft provide the primary link to the outside world. Remote or difficult locations challenge the ability to deliver, and low densities preclude economies in investment. Each of these particular local situations will call for their own special local LP Gas supply solutions and in many circumstances these will be an innovative blend of modern and traditional supply arrangements.
Dwelling Type and Occupancy
The types of dwelling present another set of factors for consideration. They may be permanent structures made from brick, wattle or mud or temporary structures often favoured by nomadic cultures.
0
20000000
40000000
60000000
80000000
100000000
120000000
Firewood
Crop Residue, Cow
dung, Coal, Lignite,
Charcoal
Kerosene
LPG/PNG
Any Other
DISTRIBUTION OF TYPE OF FUEL USED BY RURAL HOUSEHOLDS
2001
2011

48
Perhaps they are made of wood and local vegetation adapted for household construction. The storage and use of LP Gas in these different settings will require their own unique household supply and utilisation solutions. Within dwellings live households. The nature of such households also needs to be understood in terms of the occupants and the number of adults, children, parents, grandparents and extended family members. Household income, literacy levels and livelihoods are also a factor in the ability to adapt to LP Gas utilization. Most important will be a full understanding of the household’s thermal energy needs, such as cooking, baking, heating water and space heating, and the frequency of these energy needs so as to match the supply to each household demand and determine cylinder sizes, storage and delivery regimes. Literacy levels and determining the primary LP Gas user in the household are also of vital importance in terms of safety notices on cylinders, efficient use of LP Gas appliances and the physical human capabilities available for cylinder handling and use.
Access
There is another cluster of characteristics around the question of access to households. Is the only way to access the rural householder in situ at the dwelling or do they gather in local community gathering points or visit local villages or commercial centres where central distribution facilities could be established? Is there local radio, a messenger service postal services, telephones or cell phone services? Managing regular access to the key householders for communications such as promoting the product, receiving LP Gas sales orders, delivering/collecting cylinders and receiving payment are basic necessities. While in developed regions, all these things are relatively straightforward, in remote developing locations nothing can be taken for granted.
Storage, Handling and Transport
This vexing issue also faces the rural LP Gas supplier. There is an inherent economic conflict between locating cylinder storage depots as close as possible to the user, versus the potential economies of scale afforded by large centralised bottling and cylinder storage sites. When serving households scattered over many square kilometres, the logistics and economics of the last few steps in the supply chain become critical.
Cultural Factors
Local cultural factors must also be embraced within LP Gas distribution arrangements - the values of local communities, together with local religious interests can often create barriers to new suppliers from outside the community. Gender is another factor that in certain cultures clearly distinguishes certain roles between women and men. Since a primary use of LP Gas is for cooking, the preparation and serving

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of food will almost always have a variety of associated cultural factors that must be fully understood and respected.
Suppliers’ Commercial Viability
In addition to infrastructure, another significant characteristic of rural markets are the economics of supply and whether private companies can operate commercially. Many factors interact to make this a particularly challenging aspect of rural LP Gas distribution. Long supply lines, costly cylinder handling chain, high cylinder supply and maintenance costs all contrive to make the economics especially challenging. Small supply volumes required by individual households will often require aggregation into viable quantities to economically support rural distribution infrastructure investment. High poverty levels that frequently characterise rural households in developing regions present the challenge of affordability and the need to have low comparative LP Gas prices. The disposable income of households and their ability to purchase LP Gas will need to be carefully addressed. Also payment methods or revenue collection procedures will need to be highly innovative to comply with local economic conditions.
Competition
In these communities, competition also exists in many different forms. The most obvious will be the availability of cheaper or zero cost (excluding the value of time and labour) fuel alternatives such as wood, cow dung and agricultural waste. In addition, in many regions coal, paraffin and renewable energy sources also compete for rural household energy expenditure. All of these alternative and competing energy sources will need addressing in the marketing, LP Gas promotion and switching strategies employed locally by LP Gas suppliers. As well as competition between different energies there is also competition from other products and services. The expanding use of cellular phones in rural areas will compete with expenditure on fuel. Soft drink companies that have widespread coverage are another competitor.
The fact is that there are a growing number of commercial competitors for the scarce disposable incomes of rural households.
Energy Efficiencies
In the whole matter of comparative energy costs and affordability, one must never lose sight of varying process efficiencies for different thermal applications and fuels. It is always essential to ensure that, like is compared with like, and that fuel efficiency is factored into all fuel cost calculations and comparisons. While this is a highly complex and specialised area of debate, providing the efficiency is

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also embraced within comparative fuel cost comparisons, then LPGas will receive a fair hearing and be properly represented.
Switching Strategies
Strategies will need to be developed and deployed to convert rural households to regular LP Gas usage. No fuel is without cost. Wood has to be collected, stored and the ash disposed of; all labour intensive activities. The time that will be saved by using LP Gas is a major benefit to potential users that will need to be carefully explained and demonstrated. There are also less apparent costs such as indoor smoke pollution, dirt, health impacts and slow and inefficient cooking using traditional fuels. User education programmes will be required to win household users to LP Gas and they will need to deploy all the competitive benefits of LP Gas over competing alternative local fuels. Another important element will be the availability and affordability of fit-for-purpose LP Gas cylinders and household appliances. Common sense and attention to detail in meeting the thermal energy needs as perceived and understood by the users (rather than the supplier) are crucial in devising effective switching strategies.
Key Barriers to Rural Household Distribution
A barrier to LP Gas supply to rural households is a circumstance that inhibits the successful market transaction between product suppliers and consumers. From a supply side perspective, a barrier may be insufficient LP Gas to supply a large new market. Another barrier might be a lack of sufficient profit margin or insufficient return on asset investments for LP Gas supply companies and distributors. From a government perspective, a possible barrier may be failure to implement local energy policy or inability to secure necessary resale taxes. Critical demand side barriers might include user concerns such as unaffordable LP Gas prices and non-availability of low cost appliances. In terms of community factors, a barrier may be the loss of livelihoods in traditional fuel supply or the lack of patronage from local leaders or elders.
The following discussion reviews the types of barriers from a number of different standpoints in an attempt to gain a greater appreciation of the type and nature of barriers to sustainable LP Gas supply to rural households. Following the presentation of a list of barriers, they are then presented in a barrier framework within dimensions of affordability, accessibility and acceptability each from a supply and demand perspective. The section also provides a number of direct quotations from the various respondent questionnaires that directly support the list of identified barriers.

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“High price of LP Gas is the main barrier to entering the rural market. This case favours other alternative fuels like coal, wood and electric. Second, rural households are much more connected to their traditions so local companies or familiar dealers are preferred. In some rural areas, LP Gas consumption is not big enough to generate sufficient profit. Thus, we are not giving dealerships in these areas. Since rural households have some economic problems, they cannot accept standard payment and prefer to pay by long-term instalment. This is also a barrier for entering rural markets. Alternative fuels especially natural gas will be the biggest threat for LP Gas market”
---World LPG Association
Barriers to Successful Rural LP Gas Distribution
Economic Barrier
Uneconomic business cases are perhaps the most fundamental barrier to rural delivery. Here the high costs of rural distribution, low revenue, poor profit margins and unattractive investment have kept back the growth of the rural LP Gas market. The crucial question must be, can a commercial LP Gas supply company make a suitable profit, and thereby a competitive financial return on investment, when supplying rural households? Unless this barrier can be overcome successfully, all the remaining barriers in this section are irrelevant. So what must we understand about the nature of this economic barrier? There are three crucial elements, namely:
• High costs of rural LP Gas distribution.
Common factors that generate excessive operating costs to rural households include attenuated supply chains, long distances and high transport costs, poor road networks, dispersed and inaccessible customer base, high revenue collection costs; need for massive investment in smaller cylinders; and higher cylinder maintenance costs.
• Low revenue.
Rural households typically consume small quantities of LP Gas in comparison with industrial and commercial users. Such households are also typically dispersed over large areas. In addition many rural households are poor with limited disposable income. All these factors conspire to reduce revenue levels.

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• Poor profit margins and unattractive investment.
Rural distribution of LP Gas to dispersed households traditionally generates low or comparatively poor profit margins when compared with other LP Gas market sectors. This negatively impacts the attractiveness of rural LP Gas distribution as an investment destination for commercial funds.
‘Rural residential market looks unattractive to our company now because of the small percentage and also because it is not easy to penetrate into rural areas at today’s high record selling price’
-China
Demand Side and Community Related Barriers:-
Cheaper Fuel Alternatives and Affordability of LP Gas
Many poor rural households use wood or waste biomass that have a low or negative cost to the users. In addition other thermal fuels such as coal and paraffin are often cheaper than LP Gas. There is little or no financial incentive therefore for such users to switch to LP Gas.
In many countries the full market or economic cost of LP Gas is higher than alternative thermal fuels. This negatively impacts both the incentive for poor households to switch to LP Gas and the ability to pay for a more expensive thermal fuel from limited disposable income of the poor.
High cost of appliances
In comparison to a cheap paraffin stove or a simple iron grid to stand pots on for wood or a coal open fire, the comparable LP Gas cooking equipment is both more sophisticated and therefore more expensive. Poor rural households by definition have very limited disposable income. Without the money to afford LP Gas appliances they will remain enslaved to their traditional cooking methods and implements that incur no additional direct costs or burden on their limited finances. Without the necessary fuel appliances that enable LP Gas to be transformed into useful energy for cooking, water heating, space heating and lighting there will be no demand for LP Gas.
High customer switching costs from other fuels
Because it costs more to purchase the necessary LP Gas appliances than many of the appliances and equipment necessary for other fuels, rural households will be hesitant to ‘lavish’ scarce money on LP Gas appliances. They have also already paid for their existing appliances. Rural householders also need to be persuaded and educated in the use of LP Gas. There are therefore a number of ‘switching’ costs

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involved in winning first time users to LP Gas and these costs that may need to include appliance subsidies, special pricing incentives, customer education and marketing expenses all contribute to high customer switching costs from other fuels.
The main barrier and challenges are high household switching cost from other fuels and cheaper fuel alternatives. The challenge facing our organisation is to run it in a manner that will be both profitable and sustainable.
-South Africa
Lack of Awareness
Traditional households, especially those in remote rural areas in most cultures, often cling to tradition and are the slowest to adopt new technologies and modern living practices. Certainly in Africa there is in many countries a low awareness among households about alternative modern fuels, including LP Gas. This lack of awareness also exists with Government officials, entrepreneurs, women’s groups and others who influence switching rural households to LP Gas.
Awareness must precede any desire to switch to LP Gas. Without awareness of LP Gas, practical knowledge of the product and especially an appreciation of the comparative benefits, it will be impossible to sell LP Gas to rural householders.
Rural Traditional Cooking Methods
Very often, in traditional rural areas, the open fire using wood or coal for cooking has cultural, gender and lifestyle values. Certain staple foods such as maize, yams, pulses require slow cooking, well suited to traditional open fires. In Africa, the collection of wood by women is viewed as a gender value and a pile of wood outside a kraal or hut signifies a diligent mother caring for her family. In terms of lifestyle, the open fire serves several purposes apart from just cooking such as space heating and clothes drying in winter months. For reasons such as these there is usually a significant loyalty to traditional cooking methods and therefore the fuels used.
Low Literacy Levels among Rural Householders
Unlike many urban households there is often a low literacy level among rural householders. This is certainly the case in India and Africa. Low literacy presents a range of constraints on introducing and sustaining the safe and efficient use by householders of a new thermal fuel such as LP Gas.
Limited Media and Reach
In many rural developing regions of the world there is an absence of modern media such as newspapers and TV coverage.

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This is a particular problem in India and parts of Africa. With limited media and that media that does exist having a limited reach to the target rural household market creates a barrier for supply companies wishing to market and promote their product.
Diversity of Local Languages and Cultures
This is nowhere better exemplified than in South Africa where there are 11 official languages. Alongside different languages there are different cultures and traditions. Since the home is the crucible of tradition, local language and culture and it is in this precise environment where LP Gas is to be used, the diversity of language and culture can readily become a barrier to marketing and fuel usage switching.
Low Disposable Income of Rural Households and Ability To Pay
By definition this project focuses on rural households and these are more generally poor households with very limited and scarce disposable income. Not only is income very scarce it is also often sporadic, linked to crop cycles and seasonal work. Thus, serious constraints exists on many rural households’ ability to pay, both in actual prices required for appliances, but also the regularity of payments necessary for a reliable supply of cylinder refills. There may be certain times in the year or month when such households simply do not have money to pay for cylinder refills.
Supply side and macro stakeholder barriers
Fraud, Cylinder Theft, Misuse and Under-filling
LP Gas supply arrangements, especially to remote rural regions, must include robust provisions for managing and controlling fraud, cylinder theft and under filling by third parties. Much depends on cultural mores regarding ethics. In
Africa, where there are serious levels of poverty, fraud, corruption and theft is endemic. Fraud will impact every aspect of the supply operation from theft of revenue, the odd missing consignment of refilled bottles, to the free supply of LP Gas to local ‘friends’. Cylinder theft is well known in the supply industry; however it can become particularly acute in remote areas. In Brazil, which has many borders with adjoining countries, cross border cylinder theft is a serious matter that requires careful control, for example. Misuse of cylinders by rural householders is generally a matter of user education.
However if this matter is not dealt with it can lead to damage to cylinders and safety risks. Under-filling of company branded cylinders by unscrupulous third party independent LP Gas suppliers will also

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damage customers’ trust in the brand and lose revenue for the legitimate LP Gas supply company. All these matters represent serious barriers that have to be overcome in order to run a trustworthy, legitimate, cost conscious and therefore profitable supply operation.
‘Income of rural people, high switching from other fuel and low margin for company due to high transportation cost ‘.
-Hong Kong
Safety
The safe supply and utilization of LP Gas has always been non-negotiable for all members of the global supply industry.
Corporate reputations that have taken decades to nurture and maintain can be put at serious risk unless the whole matter of safety is properly and fully addressed. In some countries where safety may be seriously jeopardised in supplying LP
Gas to remote rural users, the potential commercial liabilities may be just too great for suppliers to enter rural supply.
Limited Convenient Access and ‘In Time’ Cylinder Refills
LP Gas is often simply not available in close and regular proximity to rural households. Without a local and trusted point of sale outlet that can be conveniently accessed by rural households, the product will not be purchased and used.
Without a proper local network of sales outlets that provide convenient access by customers to the product, it will be impossible to build LP Gas market penetration in the household sector.
Having a point of sale readily accessible to the rural householders is not sufficient. The brand names of LP Gas suppliers frequently adorn agent’s premises in rural areas. However these have to be supported by a regular supply of properly filled cylinders. Without timely availability of filled cylinders, the product will not be relied on by rural householders for daily household activities such as cooking. Once the reliability of supply is broken, households will readily revert to traditional fuels.
‘Barriers in rural India include 700 million population in 600,000 villages, wide geographical spread, low per outlet sale in villages, difficult and expensive rural distribution, low product exposure and experience, low penetration, low consumption, low reach of all forms of media, low literacy levels, high cost of initial

56
connection (deposit and stove), high recurring cost of refill, availability of other options for cooking at low/zero cost, low levels of awareness and availability’.
-India
‘The main obstacle related to rural distribution of LP Gas is economic, in the actual market scenario it is not profitable to distribute LP Gas to rural residential users. The bottled and canalized LP Gas are regulated and its price is a maximum price, bulk LP Gas distribution is profitable since it has larger margins’.
-Spain
Price Regulation
Price regulation can be a blunt and negative instrument when used. The ideal model that is increasingly proving itself globally is the liberalisation of supply markets with free competition. Lower prices should preferably be the result of competition rather than artificial price fixing. However, having said this, a universal principle found in most energy markets is the regulation of energy prices, either by the government, international supply cartels such as OPEC with crude oil prices; or, national electricity utilities with carefully regulated tariffs. In the case of LP Gas either the lack of or the imposition of price regulation can act as a barrier to market development. Lack of price regulation may retain excessively high LP Gas prices making it unaffordable for the rural poor. Too stringent price regulation at too low a level may act as a barrier to commercial LP Gas supply companies wishing to supply rural households.
‘Cheaper fuel alternatives and poor demand due to escalating cost of LP Gas.
Uneconomic for the distributors to travel to Point of Sales located in remote areas since the sales volume is low’.
-South Korea

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RURAL INITIATIVES OF HPCL
Community Kitchens: Selling Cooking to Poor Families in India
The Hindustan Petroleum Corporation (HPCL) is a public sector undertaking of the government, which hold 51% of the equity. It is the second largest company in India and operates refineries and the whole liquid fuel supply chain involving petroleum products, lubricants and LP Gas. The supply and distribution infrastructure of the company consists of over 6000 retail outlets,
1647 lubricants dealerships and 2200 LP Gas dealerships spread across the country, being monitored by 185 regional offices and a total workforce of 11,132 employees. HPCL operate 40 strategically located LP Gas bottling plants. The LP Gas Business Unit is the second largest LPH marketing company in the country with sales of over 2.5 million tonnes a year and a market share of over 25%.
In 1998 the LP Gas market in India was opened to competition, although in practice this is now mainly in the industrial and commercial sectors. LP Gas supplied for domestic use in both urban and rural areas is subsidised. In 2002, HPCL started a more focused and structured approach towards rural marketing to households. Out of the total 2.5 million tons supplied annually, almost 0.5 million tonnes is being marketed in
the rural areas translating to approximately 20%. The ruralpopulation constitutes 70% of the total population of India, which translates to around 700 million population and 138 million households. Currently LP Gas penetration in rural areas is estimated at 15% compared with 75% in urban areas. Most of the urban areas have been nearly saturated and due to relatively high inertia to brand switching, sustainable growth in future in the domestic segment is expected to come largely from rural markets where penetration levels are low. Rural households are therefore a key focus area for HPCL. Despite the challenges of rural LP Gas distribution, HPCL are confident that given the vast potential, once critical mass is achieved, adequate returns will come.

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In rural households, LP Gas is mainly used for cooking, although in a few cases, it is also used for lighting. The average family LP Gas usage is 7.8 kg per month and 1.3 kg per capita per month. More than 90% of rural villages are electrified although only 44% of rural homes have a connection. Supply is normally from the electricity grid, although supplies are limited due to electricity shortages.
Despite a range of new and highly innovative supply measures for rural households, HPCL found that they were still unable to penetrate a large cross section of rural households that could not afford their own cylinders, appliances and regular LP Gas refills. They therefore pioneered an innovative scheme called the HPGAS Rasoi Ghar’, or community kitchens. This provides a common cooking platform for one village where users have to only pay for the time they use in cooking food. It is usually based on a standard hourly charge. This eliminates both the barriers of one time high deposit and appliance costs as well as the recurring cost of refills. HPCL now operates over 1400 community kitchens across India benefiting more than 18,000 families.
Community kitchens are geared toward serving the below-the-poverty-line (BPL) families with ready-to- use cooking facilities in a common place. The space for the kitchen is provided free of charge by the village panchyat or villagers. HPCL renovates the area and provides the stoves, utensils and cylinders. Normally 10 to 12 families in a village use the community kitchen for cooking their daily meals. For taking forward this Rasoi Ghar concept, HPCL has tied up with various ground level organizations such as NGO’s, various self-help groups, village panchyats, who all work alongside HPCL and carry out the preliminary survey for identifying locations and for setting up the kitchens based on local conditions. HPCL then subsequently open the community kitchens along with assistance from these various local bodies
HPCL'S RASOI GHAR PROJECT
Cooking fuel in rural India is mostly wood which women have to fetch from the forest often spending an hour or more every day.
A study undertaken by MART for HPCL in 2003 in 8 states found that the poor cannot afford LPG as the initial connection cost for a 14.2 kg cylinder is Rs 1,600and the refill costs Rs 270. To address the affordability issue HPCL introduced a 5kg cylinder at Rs 95 for a refill and initial connection cost of Rs 800.Simultaneously company dealers were advised to open extension counters in larger villages to make the product available closer to the villagers and the new product was promoted in haats to create awareness. Despite these initiatives sales did not pick up as expected because as a subsequent study found the poor believed that the cylinder was unsafe – it could burst or gas could leak land some felt cooking on gas could cause health problems as gas may get into the stomach! To overcome these myths MART suggested a novel idea of a community kitchen (Rasoi Ghar) where women could experience the benefits

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of safe, clean and convenient cooking on LPG without having to make a heavy investment in a new LPG connection by bringing their raw materials. First and foremost, the idea is to introduce rural households to this clean, efficient alternate fuel to firewood, expand its usage, and second, to address crying health and environment issues stalking the hinterland.
On behalf of HPCL, MART has already rolled out over 1,600 community kitchens in 2,000-plus population villages in half-a-dozen States, where women from the poorer sections can experience the convenience of cooking with LPG in a pollution-free environment.
The PPP model involves the panchayat donating a small room accessible to the socially and economically backward classes,
HPCL contributing gas stoves, LPG cylinders and cooking utensils and a woman from the Self-Help Group (SHG) being appointed as a caretaker. Women bring in their raw material and take back cooked food paying a small fee of Rs 2. The money collected is used to buy refilled cylinder and pay honorarium to the caretaker. Thus the model is economically viable.
By and by, as women understand the safety aspects of LPG and get hooked to easy cooking, SHGs also set up `kitty' schemes where monthly contribution sled to women in turn acquiring their own 5 kg LPG connection.
"Once all the women realise the benefit, ease, safety and health aspects of cooking on LPG and the easy finance helps them get their own connection, HPCL will uproot its fixed assets in terms of the community kitchen and move it to the next village for a similar exercise," explains Mr S.V. Shahni, then Executive Director-LPG, HPCL.In fact, other oil marketing companies have also been asked by the Union Petroleum Minister to join the project and cover as much as they can of rural India.
"It is a mammoth task and involves the cooperation of the village panchayat, the SHGs and the community. We've achieved success wherever SHGs have been involved. And now forest departments, Lions and Rotary clubs are also pitching in with help," says Mr Shahni. HPCL is spending at an average Rs 8,000 to set up a kitchen for a 20-family community.
The concept is also being extended to serve more purposes than one. The draft for the National Level Programme of Rasoi Ghars includes making the community kitchen a hub that could do more things than one — cook the mid-day meal for the local school, double up as a service counter and dealership outlet for the company and help augment the caretaker's earnings by serving as a tea-cum kirana store.
The project also addresses health and environment issues. A study sponsored by the World Health Organisation revealed that Indian women who use firewood regularly for cooking inhale the same amount of carcinogen benzopyrene as if they were to smoke 20 cigarettes a day.
In terms of deforestation, a study conducted jointly by HPCL and the
Maharashtra Forest Department showed that the firewood consumption of a four member household is around four kilograms a day or about 10 small trees (shrubs). This translates into average household

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