LPG cap hike: Distributors in a spot as customers rush to return cylinders

Richa Mishra
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Since Thursday afternoon, domestic cooking gas distributors are finding themselves on a sticky wicket, as almost 20-25 per cent customers returned the 14.2 kg cylinders booked by them at market rates.

The Government had, on Thursday, increased the quota of subsidised domestic LPG cylinders till March from three to five cylinders for each household, and for fiscal 2013-14 the cap was increased from six to nine cylinders.

Distributors, who were caught unawares, found themselves loaded with non-subsidised domestic LPG cylinders which were already booked by the customers.

These cylinders are available at market rate, which effective January 18 in Delhi is Rs 942/cylinder as opposed to the subsidised cylinders that are sold at Rs 410.50.

“As soon as the announcement of increasing the cap was made, the customers who had earlier exhausted the quota of three for the remaining part of the current fiscal and had booked at market price, returned their bookings. This has left the distributors stuck with non-subsidised cylinders,” said Chandra Prakash, General Secretary, All-India Indane Distributors Association.

Cancelling of orders

A senior oil company executive said that a communication has been sent to all the distributors on Friday that wherever bookings have been made under non-subsidised category for the fourth or fifth cylinder, the distributors will cancel the orders and book under subsidised category. The online software has also been changed for the same.

Not only are the distributors stuck with higher priced cylinders, they also lose money, another distributor said.

This is because the demand for cylinders is made to the oil marketing companies at least a month ahead and the distributor has to make advance payment to the companies, he said.

Also at loss are customers who would have bought theircylinder at market price after exhausting the earlier prescribed quota for the fiscal. In a statement, Indian Oil Corporation said, “No refund shall be admissible on any LPG domestic cylinder already supplied at non-subsidised price during the period September 14, 2012, till date.”

In January alone, almost 75-80 per cent of the domestic LPG customers in metros have bought at market price. The oil companies serve around 14 crore customers and deliver over 100 crore cylinders a year across the country.

According to estimates, up to December, almost 80-85 per cent of the customers had exhausted their quota of six subsidised cylinders for the fiscal.

(This article was published on January 18, 2013)
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