Wednesday, June 27, 2012

Can LPG Diversion Stop in India?

The government of India has embarked upon an ambitious project to check the pilfering of the LPG cylinders, a major component of the domestic fuel in the country. Recently, S. Jaipal Reddy, Minister for Petroleum & Natural Gas, launched a unique initiative - the 'LPG Portal' - that will host data on the last mile delivery of domestic LPG cylinders, supplied by PSU Oil Marketing Companies (OMCs) to nearly 10.4 millions households in the country. This is expected to curb the black marketing of the LPG cylinders.

The LPG Transparency portal can be accessed through the official website of the Ministry of Petroleum and Natural Gas : www.petroleum.nic.in. It can be also be accessed through the websites of oil marketing companies Indian Oil (www.indane.co.in); Bharat Petroleum Corporation Limited (www.ebharatgas.com) and Hindustan Petroleum Corporation Limited (www.hindustanpetroleum.com).

For decades, the Indian OMCs supplied the cylinders to consumers at their doorsteps. Since the advent of economic liberalization in the country, this scenario changed with the demand for LPG cylinders by commercial establishments like eateries, hotels etc. Some cylinders even were fitted in the four wheelers. It was but natural that this surge in demand was fulfilled with diverting the LPG cylinders meant for domestic consumers to commercial customers.

In late 1990s, the government came up with idea to separate both cylinders and having color coding to identify the cylinders for each segment. However, given the level of corruption in supply cycle and absence of effective vigilance mechanism, that scheme has produced minor results when compared to the total volume of diversion.

The potal allows the consumers to know their individual pattern of LPG usage, LPG booking status, LPG refill history or request for surrender of their connection, highest consumption consumers, subsidy availed etc. The information on the portal can also be sorted by consumer number, consumer name and by distributors' name easily.

The government has expressed hope that this measure will emerge as a powerful tool for social audit for all domestic LPG supplies. This portal not only benefits consumers but is also a unique resource for civil society to access LPG distribution information, report discrepancies and register their feedback on the anomalies in supply, if any, an official release said.

Minister Reddy said at the occasion, "OMC's have been making efforts to increase coverage of LPG so that it is available in all parts of the country. However, the high prices and volatility experienced in the prices of LPG and our high dependency on imports of LPG makes it very challenging to maintain the supply of LPG to the customers at the subsidized price. The three Oil Marketing Companies supply over 32 lakhs cylinders per day and are expected to incur a subsidy burden of Rs.43,000 crore this year. Thus the need to curb unauthorized usage of LPG for commercial purposes has become acute in the recent times."

This is just one of the schemes launched by the government to curb the unauthorized use of LPG cylinders. For example, in Pune (Maharashtra), Mysore (Karnataka) and Hyderabad (Andhra Pradesh), the HPCL has launched a scheme wherein the finger prints of the consumers are registered. Similarly, IOC has decided to provide Unique Identification Numbers to the consumers. For this, the companies have joined hands with UID authority also. As per the plan, the delivery men of the company will check the finger prints of the end consumer before delivering the cylinders. These prints will be stored on the servers of the company.

In April 2012, R. P. N. Singh, Minister of State for Petroleum and Natural Gas, informed the Lok Sabha that till April 1, OMCs had blocked 8,89,267 LPG connections of Piped Natural Gas consumers, in an effort to stop diversion of subsidized domestic LPG. PNG connections are provided to households in cities having City Gas Distribution projects to supply natural gas as cooking fuel. He also informed that the Government has enacted "Liquefied Petroleum Gas (Regulation of Supply and Distribution) Order, 2000" and formulated "Marketing Discipline Guidelines, 2001" which provides for penal action against LPG distributors indulging in diversion/black marketing of LPG.

However, these measures have failed to throw up the expected results. During 2010 alone, OMCs had taken action in 140 established cases in the country for release of benami/bogus LPG connection

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