Council on Energy, Environment and Water Integrated | International | Independent
Kar, Abhishek, Sunil Mani, Adya Sharma, Surya Shekhar Auddy, Shruti Sharma, Paras Bhattarai, Rahul Das. 2024. Improving India’s Clean Cooking Fuel Supply: Recommendations to Enhance Last-mile LPG Accessibility. New Delhi: Council on Energy, Environment and Water.
Ensuring access to clean cooking energy is a cornerstone of India's development and health agendas, particularly in rural areas where cooking with traditional biomass fuels is still prevalent. The Pradhan Mantri Ujjwala Yojana (PMUY) has been instrumental in expanding subsidised LPG connections to 103 million women from low-income households, providing an opportunity to transition away from polluting fuels. To realise the government’s vision of universal clean cooking, ensuring timely and convenient delivery of LPG refills to encourage sustained use of clean cooking fuel is imperative. In rural and remote regions, the challenge of maintaining a reliable supply chain for LPG distribution is significant. Logistical challenges, high delivery costs, and a low and spare consumer base continue to hamper the viability of the LPG distributors.
To gain a deeper understanding of these challenges, an extensive telephonic survey was conducted from October 2022 to March 2023 with904 LPG distributors across the three Oil Marketing Companies (OMCs)- Indian Oil Co. Ltd, Bharat Petroleum Co. Ltd, and Hindustan Petroleum Co. Ltd, in six Indian states - Assam, Maharashtra, Jharkhand, Telangana, Uttarakhand, and Uttar Pradesh. The first-ever supply-side perspective of the LPG distribution system in India at scale, this survey provides valuable insights into the operational challenges reported by distributors, who serve as a critical link between the government’s flagship clean cooking initiative and Indian households. These findings shed light on the disparity between distributors, both within and across distribution areas (urban, rurban, rural, and durgam), the factors that distinguish disadvantaged distributors from viable distributors, and provide targeted recommendations that can help overcome these challenges and strengthen India’s clean cooking infrastructure.
The use of solid fuels like firewood and cattle dung cake for cooking leads to household air pollution (HAP). HAP is a significant contributor to India’s overall disease burden, accounting for nearly 800,000 deaths annually, particularly among women and children (Chowdhury et al. 2019). Consequently, progress towards achieving multiple United Nations Sustainable Development Goals (SDGs) has been delayed (Rosenthal et al. 2018; Gill-Wiehl et al. 2023). India has made significant advancements over the past two decades in replacing solid fuels for cooking such as firewood, dung cakes, coal, and agricultural residue with clean fuels such as liquefied petroleum gas (LPG). LPG has been the primary focus for substituting solid fuels, especially since the introduction of the Pradhan Mantri Ujjwala Yojana (PMUY) scheme in May 2016. Under the programme, the government has provided subsidised LPG connections to ~103 million poor women (households) between May 2016 and July 2024 (PPAC, 2024). LPG’s inherent scalability potential, coupled with the government’s proactive policies and targeted programmes, has fuelled India’s remarkable transition towards a cleaner energy mix.
While the rapid expansion in LPG access is commendable, the sustained use of LPG has been a challenge to consumers due to high initial costs, delivery challenges, fuel stacking, cultural preferences, etc. Previous studies have estimated that 41 per cent of Indian households still rely primarily on solid fuels for cooking (Ministry of Health and Family Welfare 2021). Among several barriers hindering the sustained transition from solid fuels to LPG, two factors, namely, affordability and easy availability of cheap or non-monetised solid fuels, have been widely discussed in the existing literature.
However, very few studies have investigated in detail the challenges related to LPG access from a supply side, particularly in rural India. A recent study by CEEW found that 64 per cent of Indian households reported receiving home delivery of their refills. The study also found that improving home delivery may increase LPG use (Mani et al. 2021).
This study investigates challenges at the last mile of India’s LPG supply chain focused on home delivery of LPG and those responsible for the same – LPG distributors. There are over 25,000 distributors (private entrepreneurs) across India that provide sales and service to over 326 million LPG consumers (households) in India (Petroleum Planning and Analysis Cell, 2024). Notably, in India, LPG is a controlled product sold by three public sector oil marketing companies (OMCs), namely, Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL) under the oversight of the Ministry of Petroleum and Natural Gas (MoPNG), Government of India. This survey has been conducted as part of the Cleaner Air and Better Health project (supported by USAID), which is a five-year initiative that aims to establish evidence-based models for improved air quality management in India.
The primary survey was conducted telephonically with a sample of 904 LPG distributors across six states of India (Figure ES1). The LPG distributorships (mostly male-dominated businesses) are classified into four categories based on the geographical mix of their consumers. The geographic category of distributors as per MoPNG are:
Figure ES1 State-wise coverage of the first-ever nationwide survey with LPG distributors of India
Source: Authors’ compilation
Note: N refers to population size; n refers to sample size.
According to the 2016 Unified Guidelines issued by OMCs, all distributors must provide home delivery except Durgam Kshetriya distributors. The other three types of distributors are mandated home delivery with a uniform fixed commission on a per-cylinder basis. At the time of survey administration (Oct 2022 - March 2023), the total fixed commission was INR 64.84 per [14.2 kg] cylinder for distributors including a home delivery charge of INR 29.26.
Self-reports from distributors indicate that, on average, a home delivery service was offered to ~87 per cent of their consumers in 2023 (Figure ES2). This is an improvement compared to 2019, where responses from consumers indicated that 64 per cent of Indian households are receiving home delivery of their refills (Mani et al. 2021). In urban areas, 72 per cent of sampled urban distributors reported providing home delivery to over 90 per cent of their consumers, while out of the sampled rural distributors, only 52 per cent reported the same. Notably, while twenty Durgam Kshetriya distributors were surveyed, they were not included in the detailed analyses for this study; these distributors account for only 8 per cent of distributors in India and are exempt from providing home delivery.
Based on self-reports from distributors, it was found that, compared to urban distributors rural distributors have a lower consumer base, lower average sales per 100 consumers, a higher proportion of PMUY consumers, and a larger share of consumers located beyond 15 km. These factors may explain the differences in their home delivery levels compared to urban distributors (Figure ES2). It was also found that the expenditure per refill sale increased for distributors as the share of consumers located beyond 15 km increased. This is likely due to higher fuel costs of travelling longer distances and lower number of deliveries per hour due to the spread and low density of consumers.
Figure ES2 Consumers catered to by urban distributors have the highest access to home delivery
Source: Authors’ analysis
Note: 10 entries were removed for this analysis because 10 responses for the share of consumers receiving home delivery were missing. Median values for the share of consumers provided with home delivery are 100 per cent for urban distributors and 95 per cent for rurban and rural distributors, whereas average values for the share of consumers provided with home delivery are 95 per cent for urban distributors, 88 per cent for rurban, and 84 for rural distributors.
This could be one of the reasons why rural distributors are likely to have lower home delivery rates (as highlighted in Figure ES2). Distributors also requested a (median) increase of INR 25 (in the case of urban distributors) and an increase of INR 30 (in the case of rural distributors) from the prevailing commission rate of INR 64.84 (at the time of survey administration) to achieve 100 per cent home delivery. Notably, since survey administration, distributor commissions were revised to INR 73.081 (which includes a home delivery charge of INR 33.43) by MoPNG, which is an encouraging step in the right direction.
Figure ES3 Distributor factsheet: Statistics for a typical (median) distributor in the sample of 904 LPG distributors
Source: Authors’ analysis
1. The LPG distributors’ commission was increased in October 2023, up from INR 64.84 in May 2022 (Baruah 2023).
It was found that some distributors across all categories self-report monthly sales below the feasibility limit as defined by MoPNG in the Unified Guidelines. 36 per cent of urban distributors and 43 per cent of rural distributors self-report refill sales per month below the minimum viable amount of 6,000 and 2,500 respectively. It is indicative of a need for a distributor support system that reflects the viability gap irrespective of their geographic location (rural or urban). Notably, as the sales figures are self-reports, hence there is a risk of bias in responses.
As evident in Figure ES3, LPG distributors are not a homogenous set of business entities though they are paid a uniform distributor commission. Hence, it may be necessary to customise policies and commissions to cater to the varied needs of different distributors (similar to how an exemption for home delivery is provided for durgam distributors).
During this study, several rounds of interactions were conducted with distributors, distributor federations, OMC officials, and MoPNG officials. Based on the survey findings and these engagements, preliminary solutions have emerged, which should be rigorously evaluated and field-tested before being formally adopted across India.
Need for a differentiated distributors’ commission model for 100 per cent home delivery
To address the significant variations in home delivery rates across distributor types, a differentiated commission model or performance-based incentives are proposed in contrast to the current uniform incentive structure (Prayas Energy Group 2020). This study has highlighted the difference in total consumer base (lower overall sales potential), the share of PMUY consumers (poor consumers are less likely to purchase frequently), average sales per 100 consumers (reflecting current business conditions) among distributor groups, and within distributor groups. Given the systemic disparity, such disadvantaged distributors - with a lower consumer base, a higher share of PMUY consumers, and lower average sales per consumer - need to be identified.
A distributor with 5,000 registered active consumers and 90 per cent PMUY beneficiaries should not be treated the same (uniform commission) as a distributor with 15,000 consumers and 10 per cent PMUY beneficiaries. Hence, there should be three categories of distributors based on their level of systemic disadvantage: normal, disadvantaged, and severely disadvantaged, and additional support should be designed accordingly. Based on this study, while a higher percentage of rural distributors are disadvantaged compared to urban distributors, a differentiated distributor commission system should be customer-category agnostic and solely focus on the disparity parameters.
Technological and supply chain innovations to complement the existing distribution model
Given the systemic disparities, exploring innovative solutions towards 100 per cent home delivery is needed beyond the existing structure and system for distribution and verification. For example, currently, a truck from an IOCL distributor travelling to a far-off location cannot serve BPCL and HPCL consumers, though all three OMCs are public sector companies. Vehicle pooling at the OMC level may effectively mitigate the challenges faced by distributors covering long distances (sometimes up to 50 km) for home delivery of LPG refills. A new mechanism could involve sharing resources such as vehicles, resulting in substantial cost savings related to maintenance, fuel, and salaries. Beyond cost efficiency, it can also optimise logistics, improving delivery scheduling, and reducing transit times, ensuring timely and reliable LPG home delivery for consumers.
Micro-distributors may also be used as an extension of the present LPG distributor model where the top-up support is directed to village-level entrepreneurs (VLEs) who can stock seven cylinders (< 100 kg for fire safety purposes as per existing law (Petroleum and Explosives Safety Organization 2016)), thereby lowering transportation costs and enhancing on-demand LPG home delivery. While existing entrepreneurs manage ration shops or common service centres (CSCs), there is an opportunity to include women entrepreneurs as well. Women entrepreneurs can help boost demand for LPG. Notably, OMCs are already experimenting with models of Urja Devis and Ujjwala Sakhis. Moreover, members of SHGs can pool resources, access microcredit for LPG cylinders, and raise awareness about safe LPG usage in villages. Additionally, the conversion of connections from a single to a double-bottle cylinder approach has shown promising results in a recent trial in Maharashtra (Harrell 2019)
Mapping consumer homes and overlaying them with road networks can provide a consumer dispersion index for distributors. It could aid the rationalisation of consumer registration, i.e. shift consumers from one distributor to another who is better placed to deliver. Further, universal adoption of technological solutions such as GPS trackers on vehicles and cylinders could also be powerful tools. All of these measures entail careful consideration of implementation and monitoring costs and should be accompanied by a robust enforcement system to ensure that improved (differentiated home delivery incentive structure) translates into 100 per cent home delivery on the ground.
This nationwide LPG distributors’ survey is the first to explore accessibility constraints in India’s clean cooking energy transition. Serving as a foundational resource, it sheds light on LPG distributors, hitherto under-studied in the clean cooking domain. While the study lays the groundwork, certain context-specific variations such as consumer dispersion need to be independently corroborated. Phase II of the study will delve deeper through analyses of qualitative interviews with LPG distributors, OMC field officers, and other stakeholders, aiming to provide more nuanced insights and recommendations for enhancing the efficiency and service quality of the LPG distribution system. As this study is based on a cross-sectional self-reported survey by distributors, OMC records would also be analysed to ascertain biases, or the lack of them, in survey responses wherever possible. The design for categorisation for disadvantage levels and the top-up support amount would also require additional data and analyses. It would also benefit from the inclusion of additional parameters outside the scope of this study, such as consumer dispersion index, and road density.
This is the first of its kind in the Global South with implications extending beyond India. The findings, derived from a nationwide survey, offer valuable insights for designing/modifying the LPG supply chain ecosystem across developing economies facing similar challenges.
The Pradhan Mantri Ujjwala Yojana (PMUY) is a flagship government scheme that provides subsidised LPG connections to low-income households, improving access to cleaner cooking fuels.
Fuel stacking refers to households using multiple cooking fuels, such as LPG and firewood, instead of relying solely on cleaner cooking fuels like LPG or electricity. This practice is widespread across India due to affordability concerns, cheap or free availability of solid fuels, lack of convenient access to clean cooking fuels and cultural preferences, hindering the complete transition away from solid cooking fuels such as cow dung cakes, firewood, kerosene, and coal.
Distributors providing home delivery of LPG refills in rural areas face challenges such as low consumer density, longer travel distances, and a higher share of low-income PMUY consumers who may not purchase refills regularly. These factors contribute to lower delivery rates of LPG compared to urban areas.
LPG distributors receive a fixed commission per cylinder, which includes a home delivery charge. As of October 2023, the commission was increased to INR 73.08. However, rural distributors report that this commission is insufficient to cover the higher delivery costs to rural and remote consumers.
The study suggests a differentiated commission model, women-led micro-distributors, and vehicle-sharing across Oil Marketing Companies (OMCs) to enhance delivery viability and efficiency.
Micro-distributors are village-level entrepreneurs who may stock small quantities of LPG cylinders to lower distribution costs and ensure on-demand supply for rural and remote consumers. Engaging women entrepreneurs and self-help group (SHG) members as micro-distributors may not only improve last-mile delivery in rural areas, but also significantly empower women by increasing household decision-making power and fostering economic independence.
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