NEW DELHI, Dec 11:
The Government will increase the number of subsidised cooking gas (LPG) cylinders a household can avail in a year to nine from current six, Oil Minister M Veerappa Moily said today.
Wary of political backlash of the decision to limit supply of subsidised LPG to just six cylinders per household annually, Moily has convinced Finance Minister P Chidambaram of the need to modify the September decision to cap the supply of subsidised cooking cylinders.
“I think it is likely to go up, definitely from six (cylinders) to nine (cylinders),” Moily told reporters here.
As per the September 13 decision, every household could avail of six LPG cylinders of 14.2-kg at subsidised rate of Rs 410.50 per bottle. Any requirement beyond will cost the market rate of Rs 931 per cylinder.
Only 44 per cent of households in the country consume six cylinders in a year, while the majority consume 9-12 bottles.
Moily said the decision to raise the cap will be taken by the Cabinet “very shortly”.
The original decision to cap supply at 6 cylinders was taken by the Cabinet Committee on Political Affairs on September 13 and the decision to raise it would also have to be taken by the Cabinet panel, he said.
“I think as early as possible,” he added.
Moily said he has had two rounds of discussions with Finance Minister P Chidambaram on the impact of the decision to raise the cap.
The Government will have to provide an additional Rs 9,000 crore annually if the cap is raised to nine cylinders.
“We are working on that,” he said on ways to mitigate the additional subsidy requirement. “We are working on certain formula to neutralise it.”
Asked if the Government will wait for elections in Gujarat to get over before raising the cap, he said: “No.”
“Even if we announce it now… It will not affect State elections as normally that State will be excluded (from implementation of the decision),” Moily said.
Sources said raising the cap on supply of subsidised LPG to nine cylinders per household in a year will mean that the Finance Ministry will have to provide an additional Rs 3,000 crore subsidy this fiscal.
On an annualised basis, the burden comes to Rs 9,000 crore.
Even with six-cylinder-per-household cap, oil PSUs face a unprecedented revenue loss of over Rs 163,000 crore on sale of diesel, subsidised LPG and kerosene. Of this, the finance ministry has to provide Rs 105,525 crore and it does not seem to have funds to meet even this share.
Increasing the cap would add another Rs 3,000 crore to this figure.
The remaining revenue loss on fuel sale is borne by oil firms.
Retailers currently lose Rs 10.03 per litre on diesel, Rs 30.93 a litre on kerosene and Rs 520.50 per 14.2-kg subsidised LPG cylinder.
In 2011-12, Government gave out Rs 83,500 crore by way of cash subsidy.
Moily said he has discussed with Chidambaram the issue of finance ministry providing a cash support of only Rs 30,000 crore as against a demand of over Rs 55,000 crore to cover losses incurred on selling fuel below cost in the first half of current fiscal.
“I am confident they (finance ministry) will meet all the requirement,” Moily added.
Meanwhile, the Election Commission today took strong exception to the Centre’s move to increase the cap on subsidised LPG cylinders ahead of the Gujarat elections and asked it to stop it forthwith.
The EC also sought an explanation from Oil Minister M Veerappa Moily by tomorrow morning for his announcement about raising the cap.
Taking suo moto cognizance of Moily’s announcement, the Commission held an emergency meeting soon after he said the Government will raise the cap on supply of subsidised cooking gas (LPG) to nine cylinders per household a year from six at present.
The EC, at its meeting chaired by Chief Election Commissioner V S Sampath, shot off two separate letters to the Petroleum and Natural Gas Ministry and the Minister.
It directed the Ministry to immediately stop the move, which came just ahead of the Gujarat assembly elections and at a time when the Model Code of Conduct is in force there, and also sought Moily’s explanation on the issue.
The first phase of Gujarat poll is on December 13 and the second and final phase on December 17.
With the Model Code of Conduct in operation, the Commission in its letter to the Secretary, Ministry of Petroleum and Natural Gas, said it “directs that the move for the reported increase in supply of subsidised gas cylinders, if any, must be stopped forthwith under confirmation to the Commission.”
“The Commission has taken strong exception to your aforesaid announcement when the first phase of polling in the State of Gujarat is only two days away. The Commission has desired that you explain your above action at this juncture,” the EC said in its letter to Moily.
The poll body asked for the Minister’s explanation by 11 AM tomorrow.
The EC letter to Moily came in the wake of media reports quoting him as saying that the supply of subsidised cylinders to each household is being raised by the Central Government from the present level of six to nine cylinders a year.
The poll body said the election process to legislative assemblies in Gujarat and Himachal Pradesh is on and the Model Code of Conduct is in operation in the two states.
Government had in September capped the supply of subsidised LPG to six cylinders per household in a year. Any additional requirement is to be bought at market price of Rs 931 per 14.2-kg bottle. Subsidised LPG costs Rs 410.50 per cylinder at present. (PTI)
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