LPG black market will thrive, fear agencies

Last week’s hike in prices of diesel and abolishment of subsidy on LPG cylinders saw a countrywide uproar, leading to Bharat Bandh on Tuesday. Few Congress-ruled states have decided to relax the cap on subsidised LPG cylinders to nine from proposed six a year, but states with BJP governments are in no mood to relent.

This essentially means that New Delhi will get nine LPG cylinders on subsidised rates but Gujarat, will have to make-do with only six cylinders a year. Further, Goa has promised to give six more subsidised cylinders over the six from the Centre.

While consumers are already calculating ways to push one cylinder for two months, life isn’t easy for the gas distribution agencies as well.

“Till now, we used to get only two price quotations for cylinders – domestic LPG (14.2kg) at subsidised rates and commercial cylinders (19.2kg) at Rs96/kg,” said PM Patel, president of All India LPG Distributors' Federation (Gujarat) on Friday.

“But with new system in place, cylinders are now available at five different price points (see box),” said Patel. “It’s impossible to keep track of supply of all types of LPG cylinders.”

Patel believes that the government wants distribution agencies to monitor supply of cylinders. “We don’t even trust our employees or delivery man with the cylinders. They go out and sell them in black!”

“The agent alone cannot monitor the supply chain. We are considering protests against the same,” said Patel. DNA contacted state energy minister, Saurabh Patel in the matter but he reserved his comments in the matter.

Of the 68 lakh registered domestic LPG connections in Gujarat, 38 lakh refill cylinders every month. Customers so far were paying Rs4,992 for 12 subsidised cylinders (at Rs416/14.2kg) a year, which will now become dearer by 41% or Rs2,040 in a year. At subsidised rates, LPG costs about Rs30/kg and without subsidy it’s priced at more than Rs53.16/kg.

For the remainder of the year ending March 2013, customers in the state will get only three cylinders at subsidised rates. “With only six months remaining, government has decided to allot only three cylinders at subsidised rates. The fourth one will be costlier by Rs340,” said Patel.