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Friday, September 18, 2020

BPCL to continue offering subsidised LPG ‘for some time’ post privatisation

The move will not necessarily lead to opening up of subsidised LPG segment to private players, according to a senior government official.

Written by Karunjit Singh | New Delhi | Updated: September 8, 2020 11:43:03 am
According to experts, potential bidders for BPCL would likely want clarity on how the subsidy programme would continue post privatisation of BPCL. (File)

Customers of Bharat Petroleum Corporation Ltd (BPCL) will continue getting liquefied petroleum gas (LPG) at subsidised rates post the privatisation of the oil marketing company (OMC). However, the move will not necessarily lead to opening up of subsidised LPG segment to private players, according to a senior government official.

Tarun Kapoor, Secretary, Ministry of Petroleum and Natural Gas, told The Indian Express the government would ensure that LPG customers of BPCL, including those under the Ujjwala scheme, would be able to continue purchasing LPG from the company post privatisation. “The entire private sector cannot be brought at the same level, but BPCL, even after it gets privatised, has to continue to handle these customers at least for some time. Therefore, a separate arrangement has to be worked out,” said Kapoor.

He noted that the large LPG customer base of BPCL would not be allowed to suffer and that the subsidy level provided to LPG customers was currently not very high. LPG prices across the country have declined because of a fall in the international prices of crude oil and natural gas as a result of subdued demand due to the Coronavirus outbreak. The central government had allocated Rs 37,256 crore for LPG subsidy in the Union Budget this fiscal.

According to experts, potential bidders for BPCL would likely want clarity on how the subsidy programme would continue post privatisation of BPCL. Currently, BPCL, Indian Oil Corporation (IOC) and Hindustan Petroleum Corporation Ltd (HPCL) provide subsidised LPG cylinders to customers and are later reimbursed by the government. The reimbursement of the subsidy has often been delayed in the past.

Vivekanand Subbaraman, analyst at Ambit Capital, said that any potential bidder would want greater certainty in the timing of reimbursements while noting that currently the subsidy levels were very low, with BPCL, IOC and HPCL reporting very low levels of subsidy in the first quarter of this fiscal due to low prices of LPG.

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