BPCL consumers to get cooking gas subsidy after privatisation too

Move may open up subsidised LPG sector to private marketers

Subsidy for the consumers getting liquefied petroleum gas (LPG) from Bharat Petroleum Corporation (BPCL) will continue even after the government privatises the company.

According to sources close to the development, the Ministry of Petroleum has decided to maintain the status quo even if a private player takes charge of BPCL.

This decision may open up the subsidised LPG sector to private marketers.

Creating a level playing field — opening up subsidy for private players — may boost the LPG business for parallel marketers like Reliance Industries (RIL) and Nayara Energy, which are struggling to get a substantial market share among the 282-million LPG consumers.

Last year, companies such as RIL, Nayara Energy, and Total had asked the government to allow them to sell subsidised LPG cylinders and be part of the subsidy-transfer mechanism.

“Whether public or private, subsidy will be going to the consumer. Since BPCL is heading for privatisation, I believe the policy for all the marketing players should be uniform,” said K Ravichandran, senior vice-president, ICRA.

Though companies like RIL, through Reliance Gas, and SuperGas sell LPG, it is unable to supply customers who earn less than Rs 10 lakh a year and are therefore, eligible for subsidy.

Subsidy to consumers registered with IndianOil Corporation, BPCL, and Hindustan Petroleum Corporation go to their bank accounts.

BPCL has around 72-million cooking gas consumers, of whom over 23 million come under the Pradhan Mantri Ujjwala Yojana scheme. At present, BPCL has 6,133 LPG distributors and 51 bottling plants in the country.

In 2019-20, of the Rs 24,468-crore subsidy outflow in the petroleum sector, more than 92 per cent, or Rs 22,635 crore, was for LPG. This was Rs 31,447 crore in 2018-19 (FY19) and Rs 20,880 crore in 2017-18.
 

LPG consumption in India during 2019-20 was 26.36 million tonnes (mt), compared with 24.9 mt in FY19.

On the other hand, domestic production during the last two years stood at 12.8 mt. This led to importing around 13.56 mt during the last financial year.

LPG consumption grew 2.3 per cent in July and 10.3 per cent during April-July this year. It grew 9.2 per cent in July last year and 1.1 per cent in April-July 2019-20.

During July this year, of the five regions in the country, the Northern region had the highest share, 30.3 per cent, in LPG sales by public sector undertakings. The figures for the other regions are 27.5 per cent (South), 21.2 per cent (West), 18.3 per cent (East), and 2.7 per cent (Northeast).