LPG sales will soar after abuse crackdown

Vol 17, PW 2 (22 Aug 13) Midstream & Downstream

One of the biggest rackets in India for years has been to illegally divert subsidised LPG cooking fuel as commercial LPG for cars.

Those days are gone, as the government cuts subsidies on LPG cooking fuel to prevent its illegal diversion to cars, a move enthusiastically welcomed by lobby groups. "LPG sales,” claims Suyash Gupta, general secretary of the industry lobby group Indian Auto LPG Coalition (IAC), “will increase by double digits (at least 10%) every year.

" Up to 350,000 tonnes LPG was sold in 2012-13 as fuel to 3m cars, the same as in the previous year, says Gupta. But Gupta adds that for every litre of LPG car fuel sold by two dozen marketing companies, between four and five litres of subsidised LPG cooking fuel is illegally used in cars to replace petrol.

That shouldn't happen anymore. In June the government began implementing a scheme to ensure no subsidised LPG makes its way on to the black market for illegal use in cars.

Each household is now eligible to get a maximum nine subsidised LPG cylinders every year, promised finance minister Palaniappan Chidambaram in his annual budget. Until now households could buy an unlimited number of subsidised cylinders, providing ample opportunity for abuse.

But now each household will pay the market rate while taking delivery of a LPG cylinder. The government will then directly pay the subsidy for nine cylinders into each customer's bank account.