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LPG look-out: what's cooking?

Let's see how an annual gas cylinder cap of six per home, which may be raised to nine, affects you.

business Updated: Dec 12, 2012 01:38 IST
Anupama Airy

What led to capping of subsidised LPG cylinders?
Before September 13, subsidised 14.2 kg LPG cylinders were being given to all domestic customers as per their needs. Even though domestic LPG cost price is directly related to international prices, oil marketing companies were selling the same at the government decided issue price as the companies were being compensated for their under recoveries (for selling LPG below the cost price). The huge subsidy burden led to capping of the LPG cylinders.


What was the subsidy amount flowing to oil companies every year?
Total under recovery for 2011-12 was Rs 30,000 crore and in the first half of 2012-13 it was Rs 18,550 crore. The projected under realisation for the year 2012-13 is about Rs 38,450 crore.

What will be the saving in subsidy to the government?
With the current level of consumption the savings in subsidised cylinders on the total consumption projected for the year 2012-13 will be 30% of half yearly consumption. At the cap of 6 cylinders this will work out to Rs 5,250 crore.

What are the details of the scheme of rationing of LPG cylinders?
It was decided that any consumption of LPG cylinders above the stipulated quota of six will be sold at the market price. For remaining period of 2012-13 this will be limited to three cylinders.

Is there any restriction on supply of LPG at non-subsidised rates?
No restriction in supply has been imposed on availability of LPG at non subsidised (non-domestic) rates. However, non subsidised cylinders will be available for customers only after exhausting subsidised quota.


What are the details of pricing for subsidised and non-subsidised LPG?
Subsidised cylinders are being supplied at Rs 410.50 (in Delhi) as declared by government. Beyond the cap of subsidised cylinder, pricing for the domestic consumer is being declared by the OMCs on a monthly basis. This for Delhi consumers is Rs 895.5 per 142 kg cylinder.

What is the scheme on direct transfer of LPG subsidy?
After capping the subsidised cylinders at six per connection, the government is now looking at the possibility of selling the cylinders sold at a uniform price with the subsidy portion being directly credited to the LPG consumers. The core database of consumers who would get subsidy is available with the oil companies, which are currently trying to eliminate multiple connections with the consumers.

What are KYC forms being sent by the oil firms to subsidised LPG consumers?
KYC forms are for consumers who have multiple LPG connections. Under the new regime, multiple LPG connections in the 'same name and at the same address' as well as 'husband and wife' having separate connections at the same address would be summarily disconnected. In case of multiple connections at same address under different names, distributors have been asked to collect KYC forms to verify genuine users. Consumers have to provide details such as name, date of birth, father's name, mother's name, spouse's name and complete address and also an optional information about bank details. They have to submit self-attested photocopies of address and ID proof along with the filled in form, for which the deadline is December 31.

How many households are using LPG cylinders and multiple connections?
As per the oil companies data, there are currently around 146 million LPG consumers. The petroleum ministry along with oil companies have identified 26 million connections which could be suspect on this account and need to be physically verified as genuine or blocked. This exercise is currently underway and is expected to be completed by December end.

What is the readiness of Indian banks to implement direct transfer scheme of cash subsidies to consumers accounts?
Banks would play an essential role in the direct cash transfer, as every person with an Aadhaar card would be asked to open a bank account to enable such transfers. As most banks are on core banking platform, there is expected to be no difficulty using the banking system for cash transfers electronically. As for customer verification, the KYC norms and through the database of oil companies, the banks will be able to verify the accuracy of customers.

What is the timeline for cash transfers?
Direct cash transfer through the Aadhaar card would be rolled out in 51 districts across 15 states from January 1. Finance minister P Chidambaram announced the scheme would aim to cover the entire country by 2013 end.