Economy

Still need to improve subsidy management: Pradhan

Richa Mishra Debabrata Das New Delhi | Updated on January 20, 2018 Published on May 15, 2016

pradhan

Logistics is the key to pricing LPG, says Petroleum MInister





When Dharmendra Pradhan, took office as Minister of State (Independent Charge) for Ministry of Petroleum & Natural Gas, in 2014, he had said, his focus would be the same as his party’s (BJP), “…removing poverty...people have expectations from the Modi Government. Modi has already dedicated the Government for the poor.”

Thus, started concentrated work on Direct Benefit Transfer of LPG, now followed with Pradhan Mantri Ujjwala Yojana. This is even as the Ministry continued to solve the contentious issue of gas pricing and introduced differential pricing, legacy issues in production sharing contracts, and revamped the country’s exploration policy.

In conversation with BusinessLine, Pradhan shares how ‘subsidy management’ will be his focus this year as his Ministry prepares to roll out DBT for kerosene and why importing LPG is cost-effective. Excerpts:

Last fiscal was spent in dealing with corporate espionage, introducing DBT for LPG, new exploration policy and correcting gas pricing. What is on agenda now?

This year our priority is on two-three things: to focus more on the subsidy management of LPG and kerosene. Even last year, the subsidy outgo from the Ministry was to the tune of ₹27,000 crore.

While we want to increase the subsidy net by including more below-poverty-line families, we also want to make it more targeted using technology. The primary focus is to provide energy access to all at affordable price.

Besides, Aadhaar is legal now. Over 15 crore people have been included in the DBT gateway. This financial year, we will introduce something similar for kerosene. Side-by-side we will also focus on improving subsidy management for LPG.

The Pradhan Mantri Ujjwala Yojana will be expanded to ensure seamless delivery. Alongside, we will have to maintain the growth in consumer numbers achieved in the last few years for the non-BPL category households, which is also an important market. If we combine the two, there will be a significant jump in the number of LPG consumers.

Despite GiveItUp scheme what you are saying is that LPG consumer base is set to expand?

It has already happened. Till 2013-14, there were 13 crore households with LPG connections, in the last two years, we have added 3.7 crore connections, both BPL and Above Poverty Line. So far, the growth was more in APL. But, as we go forward, there will be a substantial growth in both segments. For this, the whole marketing plan, requirement for more bottling plants, more distributors, more LPG will be needed — we will have to see whether it comes from domestic refineries or imports — therefore, the focus will be the whole LPG chain.

Do you think you can replicate the success of DBT for LPG in kerosene as well, particularly when States are key players? How are you dealing with it?

You are right, kerosene DBT has to be done along with States. We are in dialogue. The incentive mechanism being offered by the Finance Ministry has been well appreciated by the States.

Many States like Haryana want to join fully. Irrespective of political parties, States have started realising that the kerosene entering through black market hurts their economy. It reduces the quantum of diesel and petrol sales and the tax on those sales is a loss to the State exchequer.

Kerosene is being sold through fair price shops. There was also a concept of bio-metrics. Can that also be linked to DBT? How will you source data? Bank connectivity is an issue?

This is handled by the Ministry of Consumer Affairs, Food and Public Distribution. In the country, there are several States which are digitising their fair price shops.

Both for their own schemes and the Central government schemes also. After Aadhaar, it will be a great help for the mass escalation of the government’s DBT schemes in food, LPG and even kerosene.

Whether it is State government or Central government, slowly the beneficiary list will be based on primary data which includes Social Economic Caste Census (SECC) list, National Food Security Act list, Aadhaar and even consumer numbers of particular items.

People say there are aren’t enough bank branches. You don’t need it when you have payment banks. This is what Digital India is all about. People first thought Digital India is for the rich. But, now people realise it that it is for everyone. Slowly, subsidy will be provided seamlessly. It will be targeted to those who needed it.

You spoke of LPG imports. Would you also look at the big private refiners to supply more?

They are already supplying. As per the policy of the country, they have to give a certain percentage for domestic requirements. But, what we saw from the economics of LPG was that it is cheaper to import rather than source it from domestic refiners. We are one of the few countries who have such a large LPG network and consumer base. Pakistan, Bangladesh and several African countries have not adopted LPG.

We need more LPG, but price sensitivity also has to be kept in mind. What we have realise is that imports of LPG will go up in the coming years and imports are also cost-effective, as we are the biggest market and others are not buying.

Are you taking any corrective measures in terms of LPG pricing?

There can still be a lot of corrective measures in pricing LPG. The logistics of LPG and petroleum products can be streamlined if there were more pipelines and increased use of internal waterways. There are four main logistics routes — roadways, railways, waterways and pipelines.

Road is the costliest, followed by Railways which is slightly cheaper, as in both cases you have to pay two way charges. Shipping is still cheaper than the two.

But, the best is through pipeline as you are paying for one way. Infrastructure capacity building and more investment can help save more money.

Published on May 15, 2016
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