Oil firms block 3.8 million LPG connections

If you have multiple liquefied natural gas (LPG) connections or one along with a piped natural gas (PNG) connection, be ready to have your cylinder blocked if you do not surrender it. The three government oil marketers blocked as many as 3.8 million LPG connections by March 2012.

Oil marketing companies IndianOil, Bharat Petroleum and Hindustan Petroleum together blocked nearly 2.9 million LPG connections belonging to customers having more than one connection across states.

Similarly, around 900,000 LPG connections with consumers having PNG connections were blocked.

"With a connection getting blocked, consumers will no longer get refills. We want them to surrender such cylinders and regulators to get a refund of the security deposit and facilitate bringing new consumers under cooking gas coverage," said an oil company official.

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Though the drive was started around May 2010, the momentum picked up from the beginning of FY12, he added.

The idea is to restrict usage of the hugely subsidised domestic LPG to genuine consumers.

Among states, the highest number of multiple LPG connections were blocked in Andhra Pradesh (488,000), followed by Tamil Nadu (470,000), Maharashtra (326,000), Uttar Pradesh (220,000), Karnataka (209,000), Gujarat (158,000), Rajasthan (145,000) and West Bengal (106,000).

The most LPG connections of consumers with PNG were blocked in Maharashtra (399,000), followed by Gujarat (329,000) and the national capital territory of Delhi (160,000).

Notably, the usage cost of PNG is kept even lower than subsidised LPG so that consumers do not hesitate to shift to PNG. The country has 1.6 million PNG connections.

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Another oil industry official said while oil marketers were blocking multiple LPG connections belonging to their own company, the next stage would be blocking even those belonging to a different company.

IndianOil, Bharat Petroleum and Hindustan Petroleum, which together cater to the nation's demand, currently lose Rs 480 on every domestic cooking gas cylinder.

The country has 133 million domestic LPG connections.

A 14.2-kg LPG cylinder meant for domestic use sells at Rs 399.26 in Delhi compared to Rs 1,542 for a commercial cylinder of 19 kg, whose price is market-linked.

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The huge difference provides an incentive for black marketing and diversion towards commercial use. It also leads to indiscriminate use of the subsidised fuel.

The annual subsidy on domestic LPG is usually in the range of Rs 25,000-30,000 crore (rs 25-300 billion). For the last fiscal, the subsidy on LPG was Rs 30,000 crore.

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.