Non-subsidised LPG consumers face scrutiny from OMCs; 3 mn already blocked

Non-cash transfer compliant connections are those not linked to bank accounts and are not being provided subsidies

Three state-run oil-marketing companies (OMCs) — IndianOil Corporation (IOC), Hindustan Petroleum Corporation (HPCL), and Bharat Petroleum Corporation (BPCL) — have blocked at least three million liquefied petroleum gas (LPG) accounts this month, while another 10 million connections are under their radar.

According to company officials and dealers, the closed accounts are in the category of domestic non-subsidised consumers (DNSC) having non-cash transfer compliant (NCTC) connections. 

NCTC connections are those not linked to bank accounts and are not being provided subsidies. The crackdown, however, is to prevent the diversion of domestic LPG cylinders.

“At least 10 million accounts are under the radar. This came to notice after complaints that some NCTC accounts, which were closed before during verification, have been unlocked again in the last few months. At least three million such fake accounts were closed again in January,” said a source close to the development.

But the companies say that such connections save on tax since commercial LPG is taxed at a higher rate. While the goods and services tax for commercial LPG is 18 per cent, domestic LPG is taxed at five per cent. Now, OMCs are looking for verification of these 10 million accounts, which includes linking them with Aadhaar.

The government saved about Rs 300 billion on cooking gas subsidies by doing away with about 37.4 million fake connections through Direct Benefit Transfer for LPG (DBTL).

The government has taken a series of steps, like launching the ‘GiveItUp’ campaign, rolling out DBTL in all districts, and linking LPG connections with Aadhaar, for better targeting of subsidies.

However, there were widespread protests against the move. “The DNSC (domestic non-subsidised consumers) mostly belong to the upper middle, high and affluent classes and are not availing of subsidies at present from the government. This abrupt action may result in a chaotic situation due to no alternative fuel to cook after the blocked customers exhaust their present cylinder,” said Pawan Soni, general secretary, Federation of LPG Distributors of India (FLDI), in a letter to the ministry of petroleum and natural gas (MoPNG).

The government had last year excluded those with an annual income of more than Rs 1 million from getting LPG subsidies. Though the government was successful in detecting at least 75 million fake or duplicate connections, the FLDI points out that the recently blocked connections might be entirely those that divert cylinders for commercial use. It says that ‘GiveItUp’ consumers should also be asked to link Aadhaar with their connections. Under the GiveItUp scheme, at least 10 million consumers have given away their subsidies over the last two years and dealers claim that a good chunk of them are not compliant with Aadhaar. They do not avail of subsidies but are entitled to domestic LPG cylinders.

“This abrupt action by the OMCs has caused panic in many states and this may result in mob fury. We feel this may also adversely affect the LPG trade and customer service of the OMCs,” Soni added.

Step on the gas

• Total domestic LPG connections in India: 251.1 million
• IndianOil Corporation: 121.2 million
• Hindustan Petroleum: 65.9 million
• Bharat Petroleum: 64 million