In three months, Centre does a rethink on LPG transportation reforms

Three months after it introduced reforms in transporting liquefied petroleum gas (LPG), the Centre has done a rethink on the same.

The Ministry for Petroleum & Natural Gas has suspended from November 1, the recently introduced system under which the Petroleum Planning and Analysis Cell (PPAC) decided on transport optimisation and distribution of fuel for state-owned oil refining-cum-marketing companies. An initiative of Dharmendra Pradhan, Minister of State (Independent Charge) for Petroleum and Natural Gas, the system helped the integrated entities save almost ₹25 crore per month, since its implementation on August 1.

Agreeing that the scheme saved money for refiner-cum-marketing companies, a senior Petroleum Ministry official said, “Some stakeholders wanted a review. There were instances where costs had gone up. Based on industry feedback, we chose to suspend the scheme.”

But, why reassess a scheme if it worked to lower transportation costs for companies? Those associated with the suspension decision say that it was because it curbed the independence of the companies in deciding who the buyers are.

An industry explanation for the suspension is that the PPAC and some industry members had formed a committee for a ‘common pool of LPG supply’ to implement this scheme, but met with little success. “In fact, during the scheme, some regions went dry with no supply. The next few months being the peak demand season for LPG, a decision to put the scheme in abeyance has been taken,” an oil company official said.

Under the scheme, the PPAC on a monthly basis decided which bottling plant would lift the fuel, an industry official said. The PPAC, however, did not intervene in the contractual agreements between buyer and seller.