Having failed to align cooking gas prices with the market and limit the number of subsidised cylinders to consumers, the government is now trying to curb the misuse of multiple connections in households.
The oil ministry has launched a drive to do so. A household with one kitchen can have only one cooking gas connection irrespective of the number of family members. It can have two connections only if there are two kitchens. For a new connection, consumers are now required to give an undertaking that they will not position any other LPG installation in the same kitchen that also includes a piped gas connection.
Following an amendment issued by the ministry of petroleum and natural gas to the LPG marketing rules some months back, gas agencies now seek an undertaking from new consumers as well as those consumers who seek fresh connections against termination to give an undertaking agreeing to various conditions in the form of a notarised affidavit on non-judicial stamp paper. Those having ration cards, however, can give the undertaking on a plain paper.
The 10-point one-page undertaking has several conditions, such as neither the applicant nor any other member of his family living in the same house with a common kitchen has any LPG connection from PSU oil companies or a piped gas connection. The consumer is also required to state the connection will be used at the address mentioned in the form and only for domestic cooking. In case the consumer does not abide by the undertakings, the oil company will seize the connection and forfeit the security deposit.
There is no recovery drive by the oil companies for households that have single kitchens but multiple connections but oil companies maintain it is illegal and should be surrendered. Government-owned oil marketing companies, IndianOil, Bharat Petroleum and Hindustan Petroleum, which together cater to the entire nation’s demand, currently lose Rs 378 on every domestic cooking gas cylinder. A 14.2-kg LPG cylinder meant for domestic use sells at Rs 399.26 in Delhi compared to Rs 1,349 for a commercial cylinder of 19 kg, which is market-linked.
The huge difference provides an incentive for black marketing and diversion towards commercial use. It also leads to indiscriminate use of the cooking fuel.The annual subsidy on domestic LPG is usually in the range of Rs 25,000-30,000 crore. For the nine months of the current year, the gross subsidy on LPG has been Rs 20,516 crore. "Domestic LPG is a highly subsidised product. A household with multiple connections usually does not use it and it gets misused by distributors and diverted by distributors for commercial use. Instead of going for multiple connections, a family should go for a double-bottle connection that allows two cylinders on one connection," said G C Daga, former director (marketing) at IndianOil.
A proposal last year to limit the number of subsidised cylinders consumers could get in a year was dropped after opposition from key UPA allies, the DMK and Trinamool Congress. The petroleum ministry had made proposals to cap subsidy to the committee on direct transfer of subsidies headed by Unique Identification Authority Chairman Nandan Nilekani. The ministry wanted to bring an income-based cap on cooking gas so that the subsidy benefit was targeted at economically weaker sections.