Scrap subsidy on piped gas, Plan panel tells Deora
If the Planning Commission and the petroleum regulator have their way, the supply of subsidised LPG cylinders to users of piped natural gas (PNG) will soon stand withdrawn from households across the country.
Currently, PNG supplies are restricted to three states — Maharashtra, Delhi and Gujarat. Supplies in Maharashtra are being made by Mahanagar Gas, in Delhi by Indraprastha Gas and in Gujarat by Gujarat Gas — all state-owned companies. The PNG being supplied to customers is subsidised and is 18 per cent cheaper then even the subsidised LPG.
This means that as against Rs 305 which a consumer pays for a 14.2 kg LPG cylinder (in Delhi), he pays just Rs 246 for an equivalent amount of gas flowing through pipes into the households. Therefore, if the customers of PNG are also made to retain subsidised LPG connections, they are being given the double subsidy and the taxpayers have to bear the cost of such a subsidy.
“This is totally unjustified as currently, by and large, piped gas is supplied to the affluent section of the society in urban areas, who are enjoying this double benefit. As both IGL/MGL and LPG marketing companies — IOC, BPCL and HPCL — are under the control of the petroleum ministry, its is proposed that the subsidised LPG connections be withdrawn from the households consumers who are getting PNG. However, if the customer still needs LPG, he can be supplied with the LPG cylinder but at commercial price,” said Planning Commission member (energy) Kirit Parikh, in a recent letter to petroleum minister Murli Deora.
Deora has been asked to rollback the scheme for distribution of subsidised LPG in every area, where PNG connections are provided. However, if the users of piped gas still needs LPG, it will be supplied at the market price, which is Rs 200 more than the subsidised LPG cylinder price of Rs 305 a cylinder (Delhi price).
“Unless there is a specific policy to withdraw subsidised LPG cylinders from circulations, there is every likelihood that these will be diverted to the black market for non-domestic use with tax payers continuing to bear the cost of subsidy,” says oil sector regulator L Mansingh in his letter to cabinet secretary KM Chandrasekhar.
With the entry of private sector entities in building and operating city gas distribution networks — for which authorisations are being granted by the Petroleum and Natural Gas Regulatory Board — it has been pointed out that there should be a specific policy to withdraw subsidised LPG connections from PNG users.
Trouble in Double
•PNG that is being supplied to customers is subsidised and is 18 per cent cheaper then subsidised LPG
• If PNG customers retain subsidised LPG connections, they benefit from double subsidy while taxpayers have to bear the cost