 "Targeting, not saving, is the aim of Direct Benefits Transfer for kerosene: Dharmendra Pradhan")
Having just announced big bang initiatives for transforming the hydrocarbon sector, petroleum minister Dharmendra Pradhan is now focusing on the next stage of reforms. Direct cash transfer in kerosene subsidy, increased reliance on cleaner fuels and ethanol blending and ramping up LNG imports top the list of priority areas, Pradhan tells Sudheer Pal Singh and Jyoti Mukul. Excerpts:
How prepared are we for the formal launch of the Direct Benefits Transfer in kerosene (DBTK) scheme from April 1? How will you tackle the challenge of lack of digitised data of beneficiaries in states?
We had identified 33 districts based on the discussions with states. Most of these states are completely ready for the roll out from 1 April. We are hopeful of being able to cover at least these districts in nine states in 2016-17. This will be a substantial leap forward in the reform process. We are working to get the completely digitised data of consumers prepared. Two data sets are available at the level of states - Socio-Economic Caste Census (SECC) and National Food Security Act (NFSA). In addition, we have database of Aadhaar and Jan Dhan. Also, we have our LPG consumer list. All LPG consumers are automatically debarred from DBTK. So, digitisation of data has already been happening at a mass and grass-root level in the past 20 months. We are currently integrating all these data sets. The beneficiary list of DBTK will emerge from this exercise. Many states have prepared their own lists and scheme and are ready for cooperation in a bigger way. Many states have offered covering the entire state under the scheme by the end of the financial year. This is a sensitive matter as we are trying to ensure the poor man's entitlement remains intact.
We are not trying to focus on savings. That defeats the entire purpose. The objective is to target subsidies for the needy and not garner savings. The main aim is to cut down adulteration and the harmful impact on the environment apart from stopping leakages and corruption in delivery.
Is there a plan to make it compulsory for persons in higher income brackets to give up LPG subsidy?
It has now been made compulsory. We have already started asking people to give us self-declaration of their income levels. Should these two-million individuals (with more than Rs 10-lakh income) take LPG subsidy when nine-million have already voluntarily surrendered subsidy? The number of persons who have given up subsidy will be five million, over and above the nine million who have surrendered so far. This is because when PAHAL was being rolled out, many persons did not submit their bank accounts. This means that these five-million consumers did not want subsidy and therefore did not opt for seeding of their bank accounts numbers. So, overall, nine-million people gave up subsidy through PM's appeal and another five million gave up subsidy through this technology.
What is the status of the Ujjwala scheme for LPG connections for BPL households?
We have decided that the connections under the scheme will be given free of cost to poor households. The total cost of providing each of these connections is Rs 2,100 including Rs 1,600 as installation charge and another Rs 500. The Centre will give the companies Rs 1,600. This is different from the existing CSR scheme where the customer was still required to pay Rs 500. In the Ujjwala scheme, we have done away with even this requirement of Rs 500 payment. We have persuaded the OMCs to let go of this amount as their costs have also come down. The government is already paying their minimum cost.
What is the industry response received by the ministry on its latest round of reforms initiative? The new policy keeps the existing (producing) difficult fields out of the new pricing formula.
We have to keep in mind the objective of transparency. A lot of the existing producing fields are stuck in litigation. We have already announced a pricing mechanism for existing production (new Gas Pricing Guidelines, Oct 2014). At that time, we had said new discoveries will be allowed a premium. And we realised that a market driven price must be given if these difficult fields are to be monetised which are yet to start production. ONGC will be the biggest beneficiary of this. It has already announced a huge capital expenditure plan for its field. Other stakeholders, including RIL, are also happy. BP has also welcomed the move.
Consumers often complain the government has raised excise duty multiple times to take away the benefit from the drop in oil prices.
The crude oil price currently is at only $38 per barrel. The product prices have been deregulated. The idea behind increasing excise duty is to ensure that when prices go up, they do not pinch the consumers. Also, 42 per cent of the collection from excise duty has gone to states. We have drawn up huge plans to invest in road and rail infrastructure to increase connectivity. We will the excise duty as a buffer when an abnormal rise in prices occurs.
After these just-announced set of reforms, the next big area?
The next big task is to increase the share of cleaner and greener fuel in the country's energy basket. So, as part of the commitment made under COP-21, we want to propel India towards a gas based economy.
Natural gas is currently used in the domestic power and fertiliser industries. Gradually, with rising volumes, we will bring cheap prices in the gas market. We want to expand India's gas market. Technologically and economically, R-LNG, as energy, is cheaper than diesel.
We have unlocked more than $40 billion worth of resources with the latest reforms. A bulk of this is gas resources. This expansion of gas supply in future will benefit the transport sectors. We are talking to the shipping ministry to have barges on inland waterways run on gas.
Besides, we have to increase domestic production to meet the target of 10 per cent reduction in energy import dependence by 2022. For the first time, India will meet the target of 5 per cent ethanol blending in this sugar season. This has been possible through policy interventions including minimum price for biomass and higher procurement by OMCs. We have taken the initiative of increasing energy security at a new level by initiating talks with UAE. The Gulf countries have a priority of food security and our priority is to increase energy security. These two interests can be mutually exchanged. Also, we are adding a new chapter in our strategic relationship with Russia through partnership in the hydrocarbon sector.
How prepared are we for the formal launch of the Direct Benefits Transfer in kerosene (DBTK) scheme from April 1? How will you tackle the challenge of lack of digitised data of beneficiaries in states?
We had identified 33 districts based on the discussions with states. Most of these states are completely ready for the roll out from 1 April. We are hopeful of being able to cover at least these districts in nine states in 2016-17. This will be a substantial leap forward in the reform process. We are working to get the completely digitised data of consumers prepared. Two data sets are available at the level of states - Socio-Economic Caste Census (SECC) and National Food Security Act (NFSA). In addition, we have database of Aadhaar and Jan Dhan. Also, we have our LPG consumer list. All LPG consumers are automatically debarred from DBTK. So, digitisation of data has already been happening at a mass and grass-root level in the past 20 months. We are currently integrating all these data sets. The beneficiary list of DBTK will emerge from this exercise. Many states have prepared their own lists and scheme and are ready for cooperation in a bigger way. Many states have offered covering the entire state under the scheme by the end of the financial year. This is a sensitive matter as we are trying to ensure the poor man's entitlement remains intact.
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What is the quantum of savings expected to accrue when the scheme is fully launched?
We are not trying to focus on savings. That defeats the entire purpose. The objective is to target subsidies for the needy and not garner savings. The main aim is to cut down adulteration and the harmful impact on the environment apart from stopping leakages and corruption in delivery.
Is there a plan to make it compulsory for persons in higher income brackets to give up LPG subsidy?
It has now been made compulsory. We have already started asking people to give us self-declaration of their income levels. Should these two-million individuals (with more than Rs 10-lakh income) take LPG subsidy when nine-million have already voluntarily surrendered subsidy? The number of persons who have given up subsidy will be five million, over and above the nine million who have surrendered so far. This is because when PAHAL was being rolled out, many persons did not submit their bank accounts. This means that these five-million consumers did not want subsidy and therefore did not opt for seeding of their bank accounts numbers. So, overall, nine-million people gave up subsidy through PM's appeal and another five million gave up subsidy through this technology.
What is the status of the Ujjwala scheme for LPG connections for BPL households?
We have decided that the connections under the scheme will be given free of cost to poor households. The total cost of providing each of these connections is Rs 2,100 including Rs 1,600 as installation charge and another Rs 500. The Centre will give the companies Rs 1,600. This is different from the existing CSR scheme where the customer was still required to pay Rs 500. In the Ujjwala scheme, we have done away with even this requirement of Rs 500 payment. We have persuaded the OMCs to let go of this amount as their costs have also come down. The government is already paying their minimum cost.
What is the industry response received by the ministry on its latest round of reforms initiative? The new policy keeps the existing (producing) difficult fields out of the new pricing formula.
We have to keep in mind the objective of transparency. A lot of the existing producing fields are stuck in litigation. We have already announced a pricing mechanism for existing production (new Gas Pricing Guidelines, Oct 2014). At that time, we had said new discoveries will be allowed a premium. And we realised that a market driven price must be given if these difficult fields are to be monetised which are yet to start production. ONGC will be the biggest beneficiary of this. It has already announced a huge capital expenditure plan for its field. Other stakeholders, including RIL, are also happy. BP has also welcomed the move.
Consumers often complain the government has raised excise duty multiple times to take away the benefit from the drop in oil prices.
The crude oil price currently is at only $38 per barrel. The product prices have been deregulated. The idea behind increasing excise duty is to ensure that when prices go up, they do not pinch the consumers. Also, 42 per cent of the collection from excise duty has gone to states. We have drawn up huge plans to invest in road and rail infrastructure to increase connectivity. We will the excise duty as a buffer when an abnormal rise in prices occurs.
After these just-announced set of reforms, the next big area?
The next big task is to increase the share of cleaner and greener fuel in the country's energy basket. So, as part of the commitment made under COP-21, we want to propel India towards a gas based economy.
Natural gas is currently used in the domestic power and fertiliser industries. Gradually, with rising volumes, we will bring cheap prices in the gas market. We want to expand India's gas market. Technologically and economically, R-LNG, as energy, is cheaper than diesel.
We have unlocked more than $40 billion worth of resources with the latest reforms. A bulk of this is gas resources. This expansion of gas supply in future will benefit the transport sectors. We are talking to the shipping ministry to have barges on inland waterways run on gas.
Besides, we have to increase domestic production to meet the target of 10 per cent reduction in energy import dependence by 2022. For the first time, India will meet the target of 5 per cent ethanol blending in this sugar season. This has been possible through policy interventions including minimum price for biomass and higher procurement by OMCs. We have taken the initiative of increasing energy security at a new level by initiating talks with UAE. The Gulf countries have a priority of food security and our priority is to increase energy security. These two interests can be mutually exchanged. Also, we are adding a new chapter in our strategic relationship with Russia through partnership in the hydrocarbon sector.