The government has reportedly decided that parallel marketers of liquefied petroleum gas (LPG) will also be required to invest the statutory Rs 2,000 crore in the petroleum sector, if they want to retail it as auto fuel.
This implies that in all probability most of those involved in the parallel marketing of LPG and kerosene will not be able to sell LPG as auto fuel. As per a 1997 Cabinet decision, an investment of Rs 2,000 crore is necessary for the domestic sale of automotive fuel, once the petroleum sector is completely decontrolled from March 31, 2002.
According to the draft Bill allowing use of LPG as auto fuel, the retailers of LPG for auto purposes will have to take a minimum risk certificate from the authorities for its sale. This certificate will be valid for two years after which the authorities will have the right to take a fresh look at it.
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The government has already decided that no subsidy will be allowed on LPG when used as auto fuel. However, the 15 per cent subsidy on LPG used for cooking purposes is expected to continue.
This implies that LPG will be sold to auto users at import parity price. However, the petroleum ministry calculations show that the per litre cost of LPG (in Delhi) will come to around Rs 16.36 as against Rs 28.75 of petrol.
The ministry has also calculated that for running a Maruti 800 car in Delhi, LPG would be around 25 per cent cheaper than petrol.