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OilMin: Hiking subsidised LPG cap would promote black market

This shows that already 89.2 per cent LPG consumers, as per 2011-12 consumption.

New Delhi | Published: January 11, 2014 1:10:58 am

Even as petroleum minister Veerappa Moily came under increasing political pressure to raise the cap of subsidised LPG cylinders from 9 to 12, his own ministry is dead against the move and has advised that this will only promote black marketing of cylinders.

It is learnt that the ministry has done an quick assessment, which Moily is expected to put before the Cabinet Committee on Political Affairs. This shows that already 89.2 per cent LPG consumers, as per 2011-12 consumption, are covered by the current cap of nine subsidised cylinders a year.

By increasing the cap to 12 cylinders, the figure goes up marginally to 97.1 per cent but the final analysis is that these are more likely to be hoarders and black marketeers than genuine users.

Sources said this inference is drawn from the fact that the consumption rate of LPG has reduced showing just about 1 per cent growth recently. In fact, at the initial cap of six cylinders, the consumption was actually going down and started increasing after the cap was enhanced to nine.

If at all any genuine users do get added, the ministry believes that they would be people who can afford to pay the additional amount for extra cylinders. Official sources said the ministry has decided to oppose the move and a political decision will have to made to overrule the advice.

On the other political issue of increasing gas prices in Delhi to which new Chief Minister Arvind Kejriwal has taken strong objection, sources said, the ministry has given Indraprastha Gas Ltd the free hand but has indicated that any additional subsidy burden to reduce the prices should be borne by the state government.

It has also decided to approach the Supreme Court transferring all petitions pending before different high courts demanding lesser prices.

The ministry is in a peculiar situation as it increased the price after a Gujarat High Court order that asked the ministry to ensure rates at Ahmedabad are not more than Delhi and Mumbai. When the Ministry tried to comply by this orders and slightly increased rates for Delhi and Mumbai in order to effect a reduction in Ahmedabad, the Bombay High Court issued an order on a PIL restraining it from increasing prices in Mumbai. A similar petition is now in Delhi High Court. For this reason, the ministry has now decided to approach the Supreme Court to club all petitions and rule on the matter.

Meanwhile, the ministry Friday also notified the Domestic Natural Gas Pricing Guidelines, which puts in place a new formula for calculating the price of domestically produced natural gas, which at present is way lower to international prices and proves to be a disincentive to producers.

However, when the price is calculated and notified on April 1, sources said, the estimate is that domestic gas prices will double across the country.

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