Oil industry almost completes groundwork

CHENNAI, DEC. 30. The Ministry of Petroleum's directive seeking restructuring of the customer-base of the cooking gas distributors has brought into focus the selection policy of LPG distributorship.

Doubts have been raised whether the process is intended to help a few of the new distributors, many of whom are reported to be well connected.

On their part, the existing distributors have been pushed to a corner after the recent verdict of the Madras High Court upholding the restructuring.

Being a policy decision, the oil industry has almost completed the ground-work for the restructuring, with the objective to ensure viability of newly commissioned and hitherto unviable LPG distributorships.

As per the guideline, 75 per cent of the ceiling limit, which is fixed depending on the population of the area and the cost of living, is the viable limit for the distributors. The ceiling limit (number of refill supplied by the distributor every month) varies from 8,000 to 15,000 and is based on the 1991 census. Incidentally, one of the demands of the established distributors is refixation of the ceiling limit on the basis of the 2001 census.

Alleging that the directive would not only benefit new distributorship, but also many of the existing non-performing ones, distributor sources point out that they would be losing a substantial chunk of their customer base that they had nurtured carefully over the years. Particularly, many of the distributors had introduced value-added services to lure new customers after the oil companies announced the release of fresh connections across-the-counter.

Besides transferring of the customers, implementation of the directive would also mean closure of extension counters of the distributors, which was projected not long ago as a major customer initiative by the Ministry. In other words, the distributors stand to lose their investment on the value-added facilities and might even have to retrench their staffers.

From the consumer perspective, the restructuring programme when implemented would result in many of them being served by a new distributor. Even this is not without its share of controversies as the oil industry allows customers to prefer a cooking gas agency of their choice.

Though oil industry officials term it a routine process involving ``certain handing and taking over'' including among the oil companies, the directive has not gone down well among the distributors. However, in private, they are also not ready to discount the flip side of the selection policy, including the absence of new distributors in areas where there is large potential.

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