The Hindu Business Line : Deposit for new cooking gas connection raised by Rs 400

New Delhi, May 26 Consumers seeking new cooking gas connections will now have to fork out Rs 400 more as security deposit with the public sector oil marketing companies (OMCs) increasing the refundable deposit charges.

This comes even as the Government is yet to decide on a compensation package for the three OMCs — Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation — that are suffering heavy under-recoveries for selling petroleum products below the market price.

Due to rise in prices of input items like steel, the OMCs on Monday raised refundable security deposit for new connections from the prevailing Rs 850 per cylinder to Rs 1,250. The security deposit in the North-East has been raised to Rs 900 per cylinder from Rs 500. The cost of the gas regulator has also been raised to Rs 150 as against Rs 100 a piece earlier.

However, this may not bring down the revenue loss suffered the OMCs for selling cooking gas below the market price, as LPG cylinders are available at cost price and the present security deposit was inadequate to cover the cylinder cost, industry sources said.

Loss per cylinder

OMCs provided 61 lakh LPG connections in 2007-08. They are suffering a revenue loss of Rs 306 per cylinder on cooking gas, as the retail selling price has not been increased in tandem with soaring international crude oil prices. Domestic LPG consumption saw a growth of 10.6 per cent in 2007-08 as against the previous year. The consumption for 2007-08 stood at 11.99 million tonnes (10.85 million tonnes).

Uncertainty continues over auto fuel price hike: The Government is yet to take a decision on whether to increase the retail prices of auto fuels. To cushion the impact of surge in global crude oil prices on OMCs, the Government is looking at various options including a price hike on petrol and diesel. The OMCs incur heavy under-recoveries as they sell petroleum products — petrol, diesel, cooking gas and kerosene — below the cost price.

A senior Petroleum Ministry official said a decision on the issue was unlikely this week as the Prime Minister, Dr Manmohan Singh, was unwell. “The ministries are ready but there is no political consensus on the issue,” he said. The issue was discussed last week as well with some Ministers favouring deregulation of petrol prices as it does not add to inflation, but no consensus was reached, officials said.

Diesel tab

Decontrolling petrol prices could result in a hike of about Rs 16-17 a litre, according to sources. However, though diesel may continue to be sold at a subsidised price, a marginal hike is not ruled out. The revenue loss on petrol being incurred by OMCs currently is Rs 16.34 a litre and that on diesel Rs 23.49 per litre.

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