Oil ministry may roll out mini-LPG cylinders

Written by fe Bureau | New Delhi | Updated: Jul 25 2013, 06:59am hrs
Even as the LPG direct benefit transfer (DBT) scheme, targeting low-income communities with subsidised gas cylinder connections, begins to roll out, the oil ministry is working on catering to the well-heeled through a separate scheme.

The ministry is currently working on a proposal to sell 5- kg mini LPG cylinders through retail petrol stations of oil marketing companies (OMCs) at market-determined prices. At present, households are entitled to 9 subsidised cylinders of 14.2 kg at a subsidised price of R410.50 in Delhi. These cylinders have a market price of R832.

The official said that though the details of the scheme have already been worked out by the oil ministry, it is still awaiting the final stamp of approval from oil minister Veerappa Moily. The plan is to initially run pilots in metro cities such as Mumbai, Dehi, Bangalore and Hyderabad before rolling out to the rest of the country, the official said.

The scheme would benefit young people, such as IT professionals and other people who visit a city temporarily, and those intermittently needing gas cylinders. The ministry thus hopes to tap those people who can afford non-subsidised cylinders with small families, or those living as bachelors. It would also save people from the hassle of registering and booking LPG connections or providing a proof of address. Also, as they are available off the shelf, there would be no waiting period to worry about.

Currently, there are 145 million LPG connections in the country. Households can legally retain multiple connections, but they must declare that subsidy will not be claimed for the additional connection.

A senior OMC official privy to the development, however, expressed scepticism over the scheme. First, there might not be sufficient demand for non-subsidised gas to make it successful. Also, people who want to avoid the trouble of booking a gas connection can use induction stoves, the official said. He added that logisitically it might be difficult to monitor and administer

the scheme as it requires transporting the cylinders to petrol bunks.

Analysts say that with the cap of 9 lpg cylinders introduced last year, there has been a fall in overall consumption. Some of the excess production capacities could be channelised towards the 5-kg cylinders. Between April and June, LPG consumption fell 4% from the previous year to 3,691 million metric tonne (mmt).

An official from the Petroleum Planning and Analysis Cell (PPAC) said the concept of 5-kg cylinders has been used in the past to reach out to the rural populace and people living in hilly regions. This is because of the portability factor and lower costs associated with a small cylinder.

However, the success rate of some of these schemes have not been high.