OMCs say no need to panic on LPG despite subsidy cap

The OMCs say they have “sufficient availability of domestic subsidised, domestic non-subsidised, non-domestic exempted and non-domestic commercial LPG cylinders to meet requirements during the ensuing festive season.”

OMCs say no need to panic on LPG despite subsidy cap

New Delhi : Oil marketing companies are scrambling to build new systems and launch new checks and balances as they implement a triple pricing system for domestic cooking gas that reaches 14 crore households across the nation.

In Mumbai, Bharat Petroleum Corporation Limited and Indian Oil Corporation Limited came together for a joint communications exercise over the weekend, asking LPG consumers not to panic and assuring them that there is no cap on the number of cylinders they can consume though the subsidised price will be only for three cylinders for the six months form Sep. 2012 to March 2013.

The subsidised cylinder quota for homes has been fixed at six per year and the ministry has made it clear that here will be no rollback on this.

A PTI report from New Delhi Sunday quoted an unnamed government source as saying that there will be no rollback of the decision which was announced on Sep.13 and made applicable with immediate effect.

“No, absolutely not. There is no change (in the September 13 decision),” a top government source said, PTI reported. “If we are to change this, then there will be a shadow (of rollback) cast on the recent reforms like FDI in retail,” the source said.

On his part, Oil Minister S Jaipal Reddy said, “I have nothing new to say on this.”

He, however, clarified that all consumers, irrespective of how many subsidised LPG cylinders they may have consumed in the first half of current fiscal that began in April, will get will three 14.2-kg LPG cylinders at subsidised rates during the period till March 31, 2013.

The government had on September 13 decided to cap the supply of subsidised LPG with a view to check what it says is a burgeoning subsidy bill. Any requirement over and above the six subsidised bottles would have to be procured at market price.

In Mumbai, this means consumers will be entitled to six cylinders of 14.2-kg each every financial year at a subsidised price of Rs.435. Usage beyond this will be billed at a non-subsidised rate of Rs.906.50 per cylinder for households. There is a third “exempted” category which covers hospitals, educational institutions and others, which will be required to now pay a  bill of Rs.1131.50 per cylinder, a stipulation that is creating its own challenges for colleges and other social service institutions.

Given the scope for misuse in such a pricing system, OMCs are rushing to fill in KYC norms for LPG users to handle this change seamlessly.  The exercise comes along with a slew of measures to ensure that genuine consumers are allotted their due subsidised quota and that double connections, diversions and misuse are checked.

OMCs are separately piloting three different interventions based on bar-coding, an RFID card and a GPRS device which will be implemented by next March, BPCL executive director George Paul told reporters over the weekend.

“Suddenly, this cylinder capping issue has come, otherwise pilots were going on in step by step method. Now, there is an  urgency to bring it faster,” said Paul, who handles liquefied petroleum gas vertical for Bharat Petroleum Corporation.

He further said some system should be in place by March. But under the present manual system of checking the number of LPG cylinders delivered, a customer is required to have a domestic gas consumer card (DGCC) which keeps the record of the number of gas cylinders purchased.

However, it has been found that a majority of customers  misplace such cards due to the legacy of non-usage due to which they are forced to go to a nearby distributor, complete certain KYC (know your customer) requirements and get new cards, he said.

Apart from it, there are also issues like one person being registered in multiple addresses or the same address having multiple connections which also need to be sorted out, Paul said.

According to Paul, the move to impose caps, though fraught with troubles initially, is a very bold step given the escalating subsidy burdens.

In 2011-12, the government spent Rs.32,000 crore towards LPG subsidies, which was estimated to shoot up to up to Rs 47,000 crore in the absence of reforms. In the June quarter alone, the LPG subsidy burden had risen to Rs 11,495 crore, it was stated.

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