The Netherlands-based SHV Holdings, which sells the Super Gas brand of liquefied petroleum gas (LPG) in India, has asked the Central government to provide private players in the oil sector a level-playing field to compete with public sector units (PSUs).
Ton A Floors, senior vice-president, SHV (Asia), expressed concern over the Centre's decision to provide PSUs a 15 per cent subsidy on LPG even after the administered price mechanism (APM) is dismantled.
"It would put the private players in this segment at a major disadvantage," he said.
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Currently, PSUs receive a subsidy of 40 per cent on domestic LPG. The Union government has decided to reduce this to 15 per cent from April 1, 2002, when APM is set to be dismantled.
"If there has to be fair competition in the market, the government should extend the post-APM subsidy of 15 per cent on LPG to private sector players as well. Otherwise our operations in India's domestic LPG market cannot become commercially viable," he stressed.
It was the subsidy issue that forced SHV to stop marketing LPG to domestic consumers in India. The company made huge losses in its very first year of operations here.
Emphasising that SHV is the largest private LPG player in India with volumes approximating 1,00,000 metric tonne, Floors said, "We remain focussed on the industrial and commercial LPG markets, as government subsidies have made it unviable for us to compete in the domestic segment."
SHV has invested up to Rs 500 crore in India for the development of infrastructure such as the LPG import terminals and the LPG filling plants in Gujarat, Andhra Pradesh and West Bengal, Floors said.
"Unless the subsidy issue is resolved, we will not proceed with the envisaged second round of investment under which we were planning to invest Rs 500 crore once again," he added.