EGoM may consider limiting supply of LPG tomorrow

An Empowered Group of Ministers (EGoM), headed by Finance Minister Pranab Mukherjee, is likely to consider tomorrow limiting supply of subsidised LPG cylinders to 4-6 per household in a year.

"The EGoM meeting is scheduled for tomorrow afternoon," an oil ministry official said.

With a view to limit government's fuel subsidy bill, the EGoM is likely to consider giving every household only 4-6 LPG cylinders at subsidised price of Rs 395.35 in Delhi and asking them to pay market price of Rs 666 per bottle for any requirement beyond that.

Limiting supply of subsidised LPG cylinder is likely to save the government about Rs 20,000 crore in subsidy outgo annually.

The limited supply of subsidised LPG would be for those who own a car, two-wheeler, house or figure in the income-tax list, the official said.

Each 14.2-kg bottle of LPG normally lasts a household 45-60 days and based on this calculation a maximum of six cylinders are considered enough to see a family through the year.

At present, records of LPG distributors of public sector companies shows that a vast number of households are taking as many as 20 to 30 cylinders per household each year.

This suggests that large scale diversion of subsidised cooking gas is taking place for use in commercial establishments, such as restaurants and dhabas and as auto fuel.

LPG for commercial use is sold at the market price and packed in different cylinders.

Sources said limiting supply of subsidised LPG cylinders would help cut down losses that state-owned oil firms incur now on selling the fuel at government controlled rates.

Indian Oil, Bharat Petroleum and Hindustan Petroleum lose about Rs 63 crore per day on selling domestic LPG below cost.

The EGoM may also consider the revenue loss that state firms incur on selling not just LPG but also diesel and kerosene.

The three firms lose Rs 5.14 a litre on diesel and Rs 24.42 per litre on kerosene. At current rate, they are projected to post a combined revenue loss of Rs 108,746 crore in the current fiscal.

The EGoM, sources said, may decide on how this loss would be bridged. The Government currently roughly half the revenue loss and another one-third comes from upstream firms like ONGC.

The panel may decide if the current revenue loss sharing formula should continue or be altered.