India’s LPG Customer Base Declines by 6.2 Million Amid Gulf Supply Constraints and Halted Connections
India’s domestic LPG customer base has experienced its first decline in over a decade, dropping by approximately 6.2 million households between April and August 2023. This contraction is attributed to disruptions in LPG imports due to the ongoing US-Iran conflict, which has led oil companies to halt new connections and tighten checks on existing customers. Prior to the conflict, the Gulf region supplied around 90% of India’s LPG imports.
Decline in LPG Connections
According to oil ministry data, active domestic LPG customers numbered 327.7 million at the beginning of September, down from 333.9 million at the start of April. The number of beneficiaries under the government’s Ujjwala scheme for low-income households also fell by about 0.6 million, reaching 105.7 million. This decline reverses years of steady growth in LPG adoption, which saw the customer base more than double from 148.6 million in 2015-16 to 333.9 million at the beginning of the current fiscal year.
The growth rate of LPG customers had already moderated in recent years, with increases ranging from 11.9% to 19.6% between 2015 and 2019, tapering to around 5% or lower thereafter. In the current fiscal year, the customer base has contracted by 1%. As supplies tightened, oil marketing companies ceased issuing new connections and began using Aadhaar-based biometric verification to identify inactive customers and those with multiple connections.
Shift to Piped Natural Gas
Simultaneously, the government is promoting a transition from LPG to piped natural gas (PNG) in areas where infrastructure is available. City gas distribution companies added nearly 0.6 million PNG customers through July, bringing the total to 17.5 million. The number of billed PNG customers rose by 1.06 million to 10.7 million, accounting for roughly one-sixth of the total decline in LPG customers.
The largest regional drop in LPG customers occurred in southern India, with a decrease of 2.63 million since March. Western India followed with a reduction of 1.62 million, while northern India saw a decline of 1.5 million. Eastern India recorded a smaller drop of 0.34 million. Despite these declines, northern India retains the largest LPG customer base, totaling 99.3 million, while southern India has 79.8 million, western India 68.3 million, and eastern India 67.5 million.
India’s LPG consumption has surged in recent years, reaching 31.3 million tonnes in FY25, up from 29.7 million tonnes the previous year. However, domestic production has stagnated at around 12.8 million tonnes. Initial estimates for FY26 project LPG consumption at approximately 28 million tonnes, with domestic production expected to be around 10.7 million tonnes, indicating a significant reliance on imports to meet demand.
The supply disruptions have also highlighted India’s limited LPG storage capacity, which is estimated at around 1.9 million tonnes, sufficient for roughly 22 days of supply. The high costs and complexities associated with building specialized storage facilities have constrained infrastructure expansion, even as demand continues to rise.
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