LPG cap: Will Cabinet endorse Rahul's views?

With Congress vice president Rahul Gandhi pitching strongly for a higher LPG cap, Oil Minister M Veerappa Moily on Tuesday said the Cabinet is likely to consider increasing the quota of subsidised cooking gas cylinders to 12 from nine per household this week.

"After our vice president Rahul Gandhi said nine cylinders are not enough, I have moved a Cabinet note to increase the quota to 12. I think the Cabinet is likely to consider the proposal this week," Moily said after launching the sale of 5-kg cooking gas cylinders at petrol pumps in the national capital.

Gandhi stated at the All India Congress Committee session last week that there was a need to increase the quota to 12 cylinders of 14.2-kg each.

Moily said 89.2 per cent of the 15 crore LPG consumers use up to nine cylinders in a year and only 10 per cent have to buy the additional requirement at the market price.

. . .

If the quota is raised to 12, about 97 per cent of the LPG consumers would be covered by subsidised LPG, he said.

Increasing the limit to 12 would result in an additional fuel subsidy burden of Rs 3,300 crore-4,000 crore (RS 33-40 billion).

The government already incurs about Rs 46,000 crore (Rs 460 billion) per annum as LPG subsidy.

The government had initially capped the supply of subsidised domestic LPG cylinders to six per household annually in September 2012 in a bid to cut its subsidy bill.

The quota was raised to nine in January 2013.          

Consumers who have exhausted their quota have to buy LPG at the market price of Rs 1,258 per cylinder.

Subsidised LPG costs Rs 414 per cylinder in Delhi.

. . .

Moily said the price of subsidised LPG hasn't been raised even though international prices have gone up.

"We import 40 per cent of our LPG," he said, adding that the 5-kg cylinders being made available at petrol pumps in 24 cities will be extended all over the country.

Customers can walk into a petrol pump with proof of identity and walk out with a 5-kg cylinder, he said.

The 5-kg cylinders will be sold at petrol pumps for Rs 585.

Cooking gas cylinders were until now sold only by 13,088 LPG distributors or dealers of state-owned firms.

Now, the convenient 5-kg bottle will also be available at some of the 50,392 petrol pumps across the country.

. . .

Moily said the 5-kg cylinders will initially be available at 18 petrol pumps in the national capital.

The 5-kg cylinder scheme will benefit the migratory population such as students, IT professionals and business process outsourcing employees, as well as people with odd work hours.

It offers them greater flexibility to pick up cylinders and obtain refills because petrol stations are open for longer hours than LPG dealers.

The first-time purchase of a 5-kg cylinder will cost Rs 1,000 plus taxes, while a cylinder regulator will be available for Rs 250 and taxes.

The initial charge includes a security deposit for the cylinder.

Subsequent refills will be available at prevailing market prices, he said.