Rs 37 extra for cylinder? Dealers misusing 'difficult terrain' levy

Are you being charged Rs 27-37 extra for home delivery of gas cylinders? It is quite possible as dealers across the country are charging a special fee, applicable only to difficult terrains and hilly regions, for delivery even in plains and cities. 

According to the LPG guidelines, dealers are allowed to charge extra for transportation other than the commission they charge for making deliveries in diffficult terrains after getting clearances from the concerned district magistrate. For normal terrain up to 5 kilometers (kms), customers are entitled to a free-of-cost delivery as there is an in-built dealer commission of Rs 50 attached to the bill.

However, a few notifications of various states reviewed by Business Standard indicate that this "difficult terrain" clause is being misused in various states. “In states such as Haryana, Uttar Pradesh, Tamil Nadu and Karnataka, too, dealers are getting such clearances from local administrations and charging consumers extra. Moreover, in city areas of Himachal Pradesh and Jammu & Kashmir, even if the customer is next door, dealers are availing this option to charge extra. Companies may also be aware about this,” said an industry official on condition of anonymity. 

In November 2018, the commission of LPG distributors was fixed at Rs 50.58 per 14.2 kg cylinder and Rs 25.29 per 5 kg cylinder. The additional transportation charge is over and above this commission. 

The norm for additional charge for difficult terrain was fixed when penetration of dealers was lower. “The allegation that dealers are charging higher is wrong. This provision is used only in states like Himachal Pradesh, Jammu and Kashmir, Uttarakhand and North East, which are over 2,000 feet high. It is also applicable in areas where dealers are covering over 50 km stretch and penetration is less like in Rajasthan, Madhya Pradesh and Maharashtra,” said Chandra Prakash, general secretary, All India LPG Distributors Federation. 

Interestingly, a notification from the state of Haryana reviewed by Business Standard allows dealers to charge Rs 27 additional within 1-15 km area and Rs 37 a cylinder for 15-30 km radius. 

According to the data available with the economics and statistics division of the Ministry of Petroleum and Natural Gas and Petroleum Planning & Analysis Cell, the number of LPG distributors increased by 60.6 per cent in past four years. In March 14, the total number of distributors was at 13,896, which increased to 22,328 in November 2018. 

Prakash said as dealers are getting low commissions at present, it is difficult for them to run the business.  In the past four years, number of LPG consumers too have increased by around 100 million owing to the success of schemes like Pradhan Mantri Ujjwala Yojana. “Out of Rs 50 commission per cylinder, Rs 20.5 is the delivery expense and the delivery has to be made in a mechanised vehicle. Moreover, it is fixed based on the average minimum wage that we pay to our staff across the country. How can the average wage in Assam be same as that of Delhi?” he said. In Delhi, oil marketing companies are charging Rs 494.99 per cylinder for LPG.