LPG lobby asks Jaswant Singh for subsidy help

Vol 7, PW 17 (05 Nov 03) People & Policy

Despite this rebuff from the Indian finance ministry, private sector LPG retailers are not giving up.

Look at the numbers to understand why. In 1993, when the LPG sector was partially liberalised, the number of households using LPG as domestic cooking fuel stood at 13m.

Today, India has 72m households using LPG as cooking gas. In the years ahead, demand will increase further.

Against such a backdrop, its hardly surprising that members of the Indian (private) LPG Association met Indian finance minister Jaswant Singh in late September for help. After the meeting, ILPGA president SK Hazra wrote Singh a letter setting out his concerns.

"Sir, the total absence of a level playing field to our member-companies and parallel marketers (who have made substantial investments in our country's LPG import infrastructure) is now threatening their very survival," writes Hazra. "While the government may choose to extend the subsidy on domestic cylinders much beyond what was originally stated in the 1997 government notification, there are compelling reasons for the subsidy to be extended to the parallel marketers as envisaged under the 1993 notification." What are these compelling reasons "These companies have made large investments (exceeding Rs1, 000cr) in creating the necessary LPG infrastructure as stipulated by the 1993 notification." Hazra also tells Singh: "We are grateful for your appreciating our viewpoint and confirming the finance ministry's support in finding a feasible solution in consultation with the ministry of petroleum and natural gas." In private, parallel LPG retailers remain bitter that the government of India has duped them.

"There is absolutely no justification for limiting the subsidy scheme to the PSUs," says one company representative. "Prices of water, electricity are all going up.

Why are they so sensitive about domestic LPG" No private LPG marketer, we are told, has the financial strength to wait until the government finally scraps the LPG subsidy. "Private players will be finished.

Foreign investors will see this as a very bad signal. This could also affect their other hydrocarbon sector investments in India."

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