LPG shortage: the leakage is showing

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New Delhi, Feb 24: Many parts of the country faced a shortage of LPG cylinders from November 2007 despite the oil marketing companies—Indian Oil, Hindustan Petroleum and Bharat Petroleum—releasing nearly 6% more cylinders during April-December 2007.

The supply was 7,537.84 TMT against 7142.58 TMT in the nine-month period a year ago.

Between the reasons offered by oil companies, dealers and the petroleum ministry brass FE spoke to, three stand out.

The first is the huge price difference between commercial and domestic LPG. The price of a 19-kg commercial cylinder is Rs 1,050 against Rs 297 for a 14-kg cylinder for homes. The differential is a massive incentive for pilferage to hotels and caterers, and even cars.

This was bolstered by panic bookings by consumers on reports of a possible price hike, an extended winter and the marriage season where caterers use pilfered cylinders.

The next cause is the weeding out of employees by dealers and their replacement with contract labourers. Surprise inspections by oil marketing companies have shown that many distributors did not even own the delivery vehicles. This meant the distributor had no control of the delivery agents to take any remedial action.

Petroleum ministry officials told FE, they would soon write to the ministries of surface transport and labour and the states to enforce necessary legislation over distributors.

Another reason was the inability of the companies to prune their customer list by eliminating those who get piped gas at home. In Delhi and Mumbai, the marketing companies are still flooding the distributors with LPG cylinders in areas that have a high concentration of piped natural gas. What the distributors do with these cylinders when consumers do not lift their quota is obvious.

Here too, the ministry officials said they have asked the oil marketing companies to explain why new distributorships and connections were being opened or released in the PNG-covered areas. Petroleum secretary M S Srinivasan has ordered the companies to lock connections of LPG customers who are using PNG. In fact, Srinivasan has set March 1, 2008 as the deadline for OMCs to intimate the ministry of the number of such blocked connections.

As 20 more cities would be getting PNG in the next 24 months, the ministry has asked OMCs not to appoint new distributorship in these cities.

OMCs have been directed to work out a rehabilitation package for LPG distributors in areas that are or proposed to be covered with PNG.