On poll eve, government in rethink mode

Faced with increasing political heat and criticism within the party and outside, the Manmohan Singh government has put on hold the Rs. 26.50 hike in the price of non-subsidised LPG cylinders. It is also reviewing the cap of six LPG cylinders allowed to domestic consumers in a year.

Sources in the government said that after the oil marketing companies (OMCs) hiked on November 1 the price of a non-subsidised LPG cylinder by Rs. 26.50 to Rs. 922 per unit on firming international rates, the government came under increasing pressure and criticism for effecting one hike after another.

“A segment within the Congress was of the view that with hardly two days to go for voting in the Himachal Pradesh Assembly elections, such a decision was politically unsound and in a late-night development, the Petroleum Ministry is understood to have asked all the three OMCs to put on hold the hike in price of non-subsidised cylinders,” a senior Ministry official disclosed.

Under the revised regime, a 14.2-kg cylinder that consumers buy beyond their entitled six bottles at subsidised rates would have gone up by Rs. 26.50. The government had in September restricted the supply of subsidised domestic LPG cylinders to six per household in a year. Any requirement above this will have to be bought at market rate, which is more than double the subsidised price of Rs. 410.42 per cylinder in Delhi. On Thursday the OMCs went ahead with the hike in the price of a commercial 14.2-kg LPG cylinder to Rs. 1,105.50 and that of a 19-kg cylinder to Rs. 1,551. Previously the prices were Rs. 1,075 and Rs.1536.50. However, the hike has been put on hold.

“Petroleum Minister Veerappa Moily is learnt to have directed the OMC chiefs to come out with all the facts about the LPG supply and demand position and a review will be done on this front in the next few days,” the sources added.

The Ministry is also considering a review of the six-cylinder cap on subsidised cylinders.“There is increasing pressure from within the party to review the cap as the Congress-led governments are already giving a subsidy on three additional LPG cylinders. There is a strong demand for a review of the six-cylinder quota and raise it to 12 cylinders,” a senior official said. Mr. Moily has already held consultations within the Ministry and is awaiting a full-fledged meeting with the OMC chiefs.

“The Minister wants to know the glitches being faced by consumers and the OMCs in dealing with the new demand-supply system and it will take some consultations to arrive at a new formula. Consultations will also be held with the Finance Ministry before any kind of decision is taken... One can expect some kind of favourable decision on increasing the cap to some extent,” another official added.

According to government data, households on average require nine cylinders a year. The average was earlier estimated to be 7.2 per household, but this was based on an erroneous calculation that did not account for the fact that out of 14-crore customers, only around 10 crore were genuine consumers, and the others were only on paper for diverting subsidised cylinders for commercial use.

OMCs must take a call

PTI reports:

Admitting that the decision to limit the supply to six cylinders has caused hardships, Mr. Moily told NDTV that it was for the public sector oil firms to take a call on raising the cap. “They have gone by some arithmetic that on average only six cylinders are enough [for a household]. This is arithmetic, [but] there is also a chemistry, which they have not done,” he said.