By capping supply of subsidised LPG cylinders, the Government expected not only to save on subsidy, but also reduce misuse/diversion.

For most consumers, the issue is not pricing, but availability and getting connections.

Dealers in Delhi say though it is difficult to put a number on the misuse/diversion of cylinders, the incidence of regulated customers buying from black market has declined.

Besides, the price differential between non-subsidised 14.2 kg LPG cylinder and 19 kg cylinder has also narrowed, with the Government allowing the companies to review the price on monthly basis.

Today, non-subsidised domestic LPG (14.2 kg) is available at close to Rs 900, while the same for charitable institutions or exempt categories is available between Rs 1,105-Rs 1,260 per cylinder and 19 kg between Rs 1,551-Rs 1,765 per cylinder.

Even now, consumers with single LPG connections and having two cylinders can book a refill once in 45 days only. Which works out to eight cylinders a year. If the number is restricted to six cylinders at a lower price, then refills can be booked once in 60 days.

Most often, according to trade sources, the cylinders are diverted to roadside eateries and small restaurants, which are prepared to pay nearly Rs 400 more a cylinder. Some of the roadside eateries even return the cylinders to the delivery boys from whom they buy them, after using them for a day or two. The cylinders are then delivered to the customers with the seal and other things in tact. Of course, they will weight less.

Depending on the residential area in Mumbai, a 14.2 kg cylinder is available at anywhere between Rs 800 and Rs 1,200. Jigisha Shah, a homemaker from Borivali area, a western suburb in Mumbai, says she buys cylinders in the black market as she has exhausted her subsidised quota. She says she pays Rs 200-300 as speed money per cylinder.

The Petroleum Ministry recently clarified that there was no ban on new connections. The oil companies serve around 14 crore customers and deliver over 100 crore cylinders a year across the country.

Regarding hurdles on paperwork such as identity proof to get new connections, dealers said it is no longer an issue. For example, if one stays in a rented accommodation, a letter from the landlord/telephone bill/any other identity card will do.

New domestic connection at subsidised rates but capped at six cylinders a household is permitted, provided the customer does not already have a connection and has complied with ‘know-your-customer’ (KYC) formalities.

In fact, instant new connections for those who want them at non-subsidised rates are also available – at the customer’s request – provided all conditions, as required for subsidised connections, are met. – (Inputs from Richa Mishra, New Delhi; Rahul Wadke, Mumbai; Abhishek Law, Kolkata; and, V. Rishi Kumar, Hyderabad.)

(This article was published on November 2, 2012)
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